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THE

ECONOMIC JOURNAL

THE IOURNAL »F

ttfje IRd^nl JBconomte Society

EDITED BY

J. M. KEYNES

VOLXjMB XXIII

loiilion

•MACMILI^AN AND 00^ Limitb®

KBW TOBK: MAOMILLAN OOMPAKT

1918

kOYAL ECONOMIC SOCIETY

©atron— HIS majesty the king.

’ • * ♦

i Counpit:

NT HALDANE of Cloak, F.B.S., frmdant.
. fALFOUR, M.R. F.R.S. A

The Right Hon. CHARLES BOOTH, F.R.S.

The Right Hon. ‘.JAMES* BRYCE, O.M., F.R.S.

The Right Hon. LORD COURTNEY op Penwith.
I)ji. ALFRED MARSHALL, F.B.A.

The Right Hon. VISCOUNT MILNER, K.C.B.

The Right Hon. VISCOUNT MORLEY ok Bj.aokbukn,

Vioe^ Presidents.

^ ^ - O.M., F.R.S.

Mr. W.^. Aoworth.

Mr. G. AltMlTAGE- 4 gMITH.

Professor W, J. Ashley (Member of SdUoriat
Moardy.

Mr. Ernest Ayes.

Professor 0. F. Bast able.

Dr. A. L. Bowley.

Professor Edwin CANNAN (Member of Editorial
Boatd).

Professor S. J. Chapman.

The Von. Archdeacon W. CifNNiNGHAM,

% F.B A. A

Majoi LkonaIR Darwin.

Professor F. Y. Edgeworth, F.B.A.

{Chairman of Ediioriai Board)
Sir T. H. Elliott, K.C.B. (/Ton. Secretarji). ‘
Mr. A. Wr^’LUX.

Professor H, S. Foxwell, F.B A.

. (Hon. Seeretartf).

Professor E. C. K. GoNJj^l^f
Mr. Henry Higgs, C.BT
Mrs. Knowlei^

Mr. 0. S. I ofa. *

Sir J. Macdofell, C.B.

Mr. Bern\rd Mallet, O.B.

Professoi .i. S. Nicholson, F.B.A.

(Member of Editorial BoaM).

Sir R. H. Inglis Palgravk,# F.R.S.

The Rev. L. R. iFhelps.

Profo-ssor A. C. Pigou.

Ml*. L. L. Price (Uon. Seeretary).

The Right Hon. Herbert L. Samuel, M.P.
Sir Felix Schuster, Bart. ^

Professor William Smart.

Mr. H. 13* Lees Smith, M.P.

Sir H. Llewellyn Smith, K.C.B.

Mr. Sidney

Mr. Hartley Withers.

Mr. ALFRED HOARE, Hon.

Mr. .5. M, KEY^NES, £fi dor and Pecreftu'y.
Mr. E. .T, HICKS, Asst iSecntary,

4lorrc8Donbent9:

Prof. 0. V. Muller, for •Bombay •

♦ (Elpim.stono College, Boiitbay).
Mr. A. Duckworth ,, New South Wale<!

(Australian Mutual Provident bociety,
Sydney). ,

Prof. E. Philippovich ,, Austria •

(University of Vienna).

Prof. E, Mahaim ,, Belgium

(University of Lu^ge). 1

Prof. H. Westergaarl „ Denm4RK

( Uni velfeity of Copenhagen)
Prof, Charles Gide „ France »

» (University of Paris).

Prof. Gustav Cohn „ Germany

(University of Gottingen).
Prof. A. ANDRtiADfcs „ Greece

(Univeraity of Athens).

Pro LE Babqn D’Aulnis de Bo^ouill
for Holland (University of Utrecht).

Prof. Louis LAno ,, Hungary •
(Uaiversity of Budapest).
Prof. A. Lori A ,, Italy

(University of Turin .
Mr, JiucHi SOYB^A „ Japan

* (Industrial Bank Si Ju}>an, Tokyo)

Prof. A. A. Tschupruw ,, Russia

(Polytochniual Institute, PAersburg).
Prof. R. A. Lbhfeldt „ South .Africa

• • (Johannesburg).

Prof. G. Cassel ,, Bi^bden

• • (University of Stockholm).

Prof.E.E.A.SBLiGMAN ,, 4 Jnited States
(C olumbia University, New York).

Applications for Fellowship should be addressed to the SECRETARY,
Royal Economic Society, 9, Adelphi Terrace, Londoi^ W.O. The Annual
Subscription* is a Guinea (26 J F^ncs^ &.ny Felloe may compound for his
future yearly payments bv a Life Subscription of Ten Guineas (265 francs).
There is at present no entrance fee.

Editorial Communications should be addressed to J. M. Keynes, Esq.,
King’s College, Cambridge.

INDEX TO THE ECONOMUD* JOU.RlfAL

VOLUMl xxm

OEIGINAL AB"'1CLES

' PAGE

Ashley, Prdi W. J,, Comparative Economic History and the English Land*

ldi*d 165

Bowley, A. L., Th> Census of Production ... 62

43owley, A. L., Relation between Wholesale and Retail Price.s of Food ... 61 4^
Carr- Saunders, A. M., The Feeding and Medical Treatment of "^kihool

Children . . ' • 856

Chapman, Prof. S. J., The Utility of Income and Progressive Taxation ... 36

Chi Zang WAung, The AnciSht Coins and Currency of China ... it... 624

Cohn,, Prof. G., Germali Experiments in Fisteal Legislation 537

(^mniion, J,, The Incidence of National Insurance Confributions 367

Edgeworthf Pi’of. F. Y., Contributions to Theory of Railway Rates. IV. ... 206

Glat:^, I., .A# Suocessful^Social Reformer, Ernst Abbe 32|

Johnson, W, The Pure Theory of Utility Curves 485

Jones, J. H., Dumping and the Tinplate Industry « 182

Keeling, F., The Casual Labotu' Problem 1

^Lavington, F., The Social Interest in Speculation 63

Lehfeldt, Prof. R. A., -^Finance of Railway Itationalisation fei Great Britain 340

Mclljaith, J. W., Pfioe Variations in New Zealand • 348

Pigou, Prc^. A. 0., The Interdep^dence of different sources of Demand and

Supply 26

Stamp, J. C,, Incicfencc of Increment Duties 194

Tillyard, F., English Town Development 647

REVIEWS

Ashley, Annie, Sgcial Policy vf Bimarch By H.* W. llaorosty 272

Babson and May, 0(mm$rcial Paper for Merchants^ By Benjamin White ... 688

Barbour^ Sir David, The Standard qf Valw, By J. M. Keynes 390

Beard, C. A., Economic Interpretation of the Constitution qf the United ^tates.

By W. Pringle 414

BeeVt M.f Oeechicite des Sozialismm in England, By M. Epstein 276

Bbhm^Bawerk, E. vonf Pofitive Theorieeftes KapitaUs, By James Boimr ... 241

Brisco, N. A.^^eonomic3 of Business. By L. R. Dicksee 615

Cadbury, M.,eExperiment8 in Industrial Organisation, fty Prof. A. 0* Pigou 116

Chapman, S. J., Political By P. H. Wickstee^ ... 72

OhapmAU, S. J., Ektnmtary Economics* By Harold Wright 427

INDEX

EE VIEWS {coTvtmvsd ) —

PACK

Chattfti-ton, Alfred, Indmtfial Evolution in Bidia, By Sir Jamoe Wilson ... 252
Clark, J. B., and J, M., Control of Trusts. ,By Prof. D. H. Mac^ogor 485
Cleveland, F. A., and Powell, P. W., Hailroad Fina/ice, By W. T.

Stephenson I * ... 601

Collins, E. A., By G. F. Shove ... ... 486

Copeland, M. T., The Cotton Manufadmring hidustry of the Unjfm States.

By H. W. Macrosty 255

DeliDj E. M. K., The Oeroyan Cotton Industry. By H. W. Maerosty ... 594

Dibblee, G. B., The Laws of Supply and Demand. By H. D. Henderson . . 75

Einaudi, Luigi, Intomo al foncetto di Reddiio Imponihile. By Prof. A. C.

jTigou f. ... •* 260

illewyck, E. Van, La Banque NaiionaU de Belgique. Bj^ F. Lavingt(|a ... 586

Encydopoedia if Industrialism. By Prof. D. H. Maegregor ... ... ... 265

Fanno, Marco, Le Banche c il Mercato Monetario, By 0. Poz^jraad,.. ... 268

Farnani, H. W., The Economic Utilisation of History. Bf L. L. Price . . 41 ‘2^

Fa3% C. R., Co-partnership in Industry. By Ancurin Vi illiains 591

¥\9\\ot, IvYmy,, Elementary Principl>cs of Econofinios. By H. I) Honder&oii ... 246

Fle(!k, Anton A., Kanada, Volhfnoirthschaftliche Grundlagen und WelHvhih-

schaftJkhe Beziehungc^. By H. W. Macrosty .. # 265

Ford, James, Oo-oprration in Nev' England. By H. W. Wolff 2^1

I^oster, The English Factorm in India. By C. Grant Robertson ... 402

Garr, Max,, Ulrtschqftllchen Grundlagen des Modernen Eeittmgswesens. ^By

Helene Reiiihcrz ... 94

Gaskoll, T. P,, Protection paves the Path of Pros)Hrityr * By H. 8. Fiirniss 611
Gibbon, I. G., MedicoX Be nr fit, in Germany and Denrnarh, By N. B. 317

Gill, Conrad, The Naral Mutinies of . By F. M. Hai Jman ... . 016

Gloek(*r, T. W., Governmert u Americovc T-ade Unions. By F. B«^’€‘liog 0l4
Gnj'ot, Yves, La gestion vor C Ltax ci I’f inuvtcipaliT^s. By Donglys 108

Haa.se, A,*, Die inodrrnen LSsch- und LadseinrUhitingfiii, B}' F A. Hi. a* 132
HaUVy, lillie, Jlisioire du penph au XJ K.‘' s>iclr, i<y H. Fay 277

Hawtrey, K. 8., drofid and Pod Trade. 'W Prof. A C. Pigo*.: ... ... 580

Hoi(]horiit A., Ia’a Financt^ Ofhmona. By T»L 127

Higginson, J. H., Taq;iffs at U'oric. ■*By N. B. i'earlo ... ... ... 429

Hirst, F. W., The Panics. By 11. Fnrmss ... c... .. ... 609

Hobson, J. A., 'ioM, Priee^^ and IPages. By J. M. Keynes ... . 393

Huart, A., L' Organisation du Credit cn France! By W. F. Spalding ... 683

Ischchanian, 1), , Die ausland,isehcn EUmente iv der ncssuchen Ifalkswirtschaft

By H. W. Mu^rosty t.. 433

Jackson, F. Hnth^ and others. Lectures on British Commeiie. By ^

VV. J, Ashby . ..." *.112

Kaufmann, A.. Theorie und Methodender Statistik. By A. L. Bbwley • ... 608

Keynes, J. M., Indian Currency and Finance. By P^of. H. S. FdxweU 561
Leaf, Walter, Troy : A Study in Homeric Geography. By <5. P. S§nger 239
Lenz, Paul, Die Konzen* ration im Seeschifffahrtsgexoerhe. By Douglas Knoop 267
Lethbridge, Sir Rop<r, Indian Offer of Imperial Preference, By Sir J,‘M.

Douio* 572

Levy, H., Grundlagen des vkonomischen Liberalismus. By L. K, flyder 413

hicimfiniii U.f Die UnternehTnung.formen. B^H. W» Jdacrosty* 109

lioria, Achlille, Les Bases iconomiques ^ la, Justwe int&rnatiomle. By

Norman Angell ... ^ .• 100

McCabe, D, A., Standard Bade in American Trade Unions, By F? Keeling, 614
Mahaim, E. , Lc Droit T Mernational Ouvt ier. By S. Sanger 422

INDKy

REVIEWS (coniinuecl)--

PAGE

Manes, A., Das yersicherungswgsen. By A. F. Jack 606’

Marriott, I. A. R., Fremh Bfftibl'iition of 1848 in Us Economic Aspect. By

C. R. Fay ^ ... 406

Martin, E., JTistoire finandkre de VAngleterre, Ijy L, L. Price *409

Mataja, Vic|oi, La H^laTne. By G. B. Dibbfee .* 115

Moulton, H. (f., Waterways versus Railways. By W. M. Acworth ’ 89

O’Connor, 0., and others, San Francisco Rel^f Surrey. Ry Helene Reinherz 602 ""

Ogburn, W. B., Ghild-labor Legislation. By F. Keeling 616

Passow, R., Die gemischt privaten und dffentlickin Untetnehmungen. By

Douglas Knoop ’ . *

Pataud, E., and Pouget, E., Syndicalism, znd the Co-operative Cornmonwealth.i * •

By Robertson 420

Ponson, T. H., EcovKimics of Everyday Life. By N. B. Dearie 428

Pierson, N, G., Pfinciples of Economics. Vol. II. By Prof. S. J. Chapman *70
Pigou, A. 0., Wealth and Welfare. By Prof. F. Y. Edgeworth ... ... 62

Pot']»t*i*b;j jkeus. J., Die allgemeuts Ndhrpjlv'M als L6sung dn sozialen Fragc.

By M. Epstein 281

Preyon, W. D.^ Die Arbeiis- und Packtgenosscnschnften Italiens. By H. W.

Wolff ... ^ 4 269

J'rolhero, R. E., English Farming Fast and Present. By C. R. Fay 23^

Raynaud, B., Vers le Salaire Minimum. By W. G. Constable ... • ... 416

Reimer^ C. E., Die Deuischen Riihnen und ihre Angchbngen. By Helene

Reinhorz 94

Ripley, W. Z,, Railroads: Rates and RegulatioTUs. By W. M. Acworth ... 379
Robinson, E, V., ^ilroad Taxation in Mihiusota. By J. C. Stamp ... 431

Robinson, M. F., The Spirit of Association. By L. L. trice 423

Rohs, ‘Li.sa« Weihliehe Dienstboten und DienstbotenkalHng in England. By

Helene Reinherz ... ... ... J ... 280

SainaStlar, By S. C. Da.s Gupta ... ... 578

Schmoller, Gustav, Charakterbildcr. By I?ercy A.shley * 249

^c]i\ini'pci^r,ii.,Th€oriedA:rwirt8chaftlickcnEntwicklung. By L. B. Naymier 105
(r., Die Formen des wirtschaftlichen Kampfis. By M. Epstein ... 122

Scott, W. R., Constitution and Finance of Joint' Stock Companies io 172P. By

H. Olapham 80

Sellers, Maud, The York Memorandtmi Rook. By J. H. Claphani ... ... 278

Seligraan, E. R. A., Essays in Taxedion.* By H. D. Henderson ... ... 887

Shelton, W. A., The Lakes-todhe-Qulf Deep Waterway. By W. M. Acworth 89
Dv., Kommunaler Fleischversorgung. By C, W. Guillebaud ... 698

finger, J., Das Land der Monopole. By H. W. Macrosty 596

Sonibart, W., Krieg tend Oapitalismus. By J. H. Clapham 898

Sombart, W., Ldxus und Oapitalismus. By J. H. Clapham 398

Stevens; W. S., Industrial^ CombincUions and Trusts. By Prof. D. H.

Maegregor * 263

Streightoff, F. H., Distribution of Incomes in the United States. By A. L.

Bowley , ••• 425

Tawnoy, R. H., The Agrarian Problem in the Sixteenth Century. By Prof.

W. J. Ashley 85

Thomson, Mary ] 9 ., Epvirtnment otrid Efficiency. By H. W. Macrostj; ... 272

Vineberg, G., Provincial and Local Taxaldon in Canada. By J. C. Stamp ... 126

Watney, C., ^and •Little, J. A., InduMrial Warfare, ^y W. G. Constable 124

WebJb, M. de P., Advance India! By H. M. Ross 576

Webb, S., and B., Tfu Story of the Kind's Highway. By%ir George Gibb and

W?M. Acworth 227

AnSWS (liMMlMMi)-

, • ' Mi

SUdnie/, Bdited hf^ SecmuU Trades, Bg Prot* B, Jn Qi$^msn ... 1^9
Knnt, ForUsunffm 4iher NaltdomVSkmomU, By Bmi A. 0* 7i||^

Oh^ld^0% ByH.Hr.

Hftcroity « I ... ,.. 972

t, |S.| AdmUsim to Ameru^ Trade Vidons, By ?. Keeliiif Ifiii

KOTBS im> MBHOBANDA

1. G., The Workingeof the Insi^anoe Act ... ••... ... *.. 927*

Mahfliin, Prof. E., The General Strike iii*Belgium 294

Mortara, Prof,^., The Economic Revival of Messina ... 488

Hoore, S. 0., The Trades Board Act at Work ^ 442

Ogilvie, A. M., A New Histoiy of the Post Oifioe 187

Plunkett, Sir Horace, American Agricultural Commissiou ... » . 291

Baper, Prof, 0. L., and Acworth, W. M., Professor Baperia “Railwey^Prans*

portation*' .. .. ^ 299

Bees, J. Mbrgan, Wages agd the Cost of Living in South Afriqi* ... ^ .«# 180

k Stamp, J. 0., The Tax Experiment in Wisconsin ^142

Stephensop, W, T., Railway and Canal Traffic Act, 19X8 • 2fc

Stockbroker, A., Depreciation of British Home Investments. 11 '284

Wood, Prances, Index Numtos for Working Class Cost of living ... - 019 ^

OFPICIAL PAPERS :~

Beport of Departmental Committee on matters affecting Oun'ency of the British
West \frican Colonies ana i^oteohuates. By .1. M. Baynes em 146

Beport on Ag^cultural Credit and Oo-O{)eration in Genoany. % H. W.^

Wolff ... • * 804

Beport of Departmental C^mitcee on the Night EntploymOnt of Male Young

Persons in Facto4c8 an^ Workshops. By F. Eeelii^^ 309^

Beport of fte Committee of Inquiry into the Conditions ofrfJmploymeut m
the Linen and other Making-np Trades of the North of Ireland," By

G. Jebb • • ... 808

Report on Profit-Sharing and Co-Partnership, By E. Aves ... .. 447

Beport of the Indvstnal Council. By A. Grasnwood 449

Report on Conditions of Employment of Van Boys. By A. Greenwood .. 461

Report of the Chief Inspector Bf lactones and Workshops for the yellSr 1912.^ *

. By A. Greenwood ... ^ ... * 464

Report of an Inquiry by the Board of Trade into the Earnings and Honz9 of
Workpeople in the United Kingdom. VIIL By N.%. Dearie ^ 465

Report on Oo|t of Living. By M. Epstein ... ..g 632

Other Official Papem * 148, 869, 459, 685

NOTKB ON dTBfiENT TOPICS 16M88, 812^1^ 488-487, 889-844

lUtOXN]' miOCKOjlIiS aW N£W books 184-184, 818-888, 4M-882, 848

BBviBWsaa>-'

Ao«<ndl W* *„ 8#, #y8.

JkagliSi, 100.

X,S5, 112.

Bolaar> Sfo^m, 2il« ^ ^

Baw%, A. L., 421$^ 60^.
aiMpm$ai, Trof, a X, 70. IW
OhphBm, X 80, 278, 808

W. a., 124, 4ia
Dftd Ouptft, S* 0«, o7a
]:)68rle, B , lir, 428, 420.

Dibbl^e. a. a, 110

Bielcwe, a E., 818.

DouH^Bur X M., 072
E^iWi.s JhoL F. Y., 62
»p$|te||»,A , |22, 127, 276, 281.
FftftiC a, 277, 406

Prof. 9L a, P61.
fnnti^ H S., 600, 611.

Oibb, Sir Oaorge, 227.
^IHillbbaiid, 0. W , 608.
^Hardmaii, F. M.,''616.
Henderson, H. D., 76, 24R, B87
Howe, F. A., 482»

E|||^der, L« E«, 418
Jaek, AaF., 606.

^4, 616.

Kejrnes, J. 890, 808.

f^noaprp^lmt 107, 108, 287.

lAvin^tdfdi F., 688.

BftM^gor, Prof. D. B., 288f«285,
486. ^

HgishMbf, H. W., 100, 266, 206,272,
4% 604, 506. ^

Naymler, X B„ JOO, . *

Pigott, Prof. A. a, 116, 280.^680i 806.

a x. X , fOO, 412, 42K.^

>, W. H., 414. * *

Eemherz, Bliss H., 04, OSO, 80a
Robertson, 0. GraiS, 402.

Robertson, D. H., 420.
Ross, H M., 676.
Eozenraad, 0 , 266.
Banger, C P., 280.
Sanger, S , 422.

Shove, F , 486.
Spalding, W. F., 688.
Stamp, J a, 126, 481.*
Stephenson, W. T., 601.
White, Benjamin, 688.
Wicksteed, P. H , 72.
Williams, Aneunn, 601,
Wilson, Sir James, 252.
Wolff. H. W , 269, 271
Wright, Harold, 427

ERRATUV*

Page 6^, lines 4 and 6, transpom “formei and “latter.’

THE

ECONOiaiC JOURNAL

VOLUME xxm

THE ECONOMIC JOURNAL

1918

feEj SOLUTION OF THE CAStJAI» Li:BOUE
PROBLEM

Tscb %^'^t^'Hxcba|iges Act was the first important legislative
etpre|isi^ ^O^ wid^pread and confident belief in this ooontiT
that , a dee^ier midenM;anding of the problem of unemploymeni
ha^At last been reacUbd. Many hopes were centred upon the ne\v«
^ganisatibn. among them was the expectation that

l^'vrould^prove the means' of grappling with under-employment,
in the new analysis of the phenomena of unemployment,
Mhd boon more or less isolated ap a d|ptiact problem. The Labour
Ex^a^ges soon found themselves dealing with a large number
of very short engagements of Labour. Some of these belonged
1^. ocou|tttionS such as dobk labour, in which short engt^ements
(kte more or lisa inherent in the njiture of the work^ After the
first year of the operations of the Exchanges, dn attempt was
mfide to -isolate the statistics of the casual Idbom trades in regard
to the application^ vacancies and placings, by the institution of
a special “.casual register,” subdivided into special sections, for
caoual emidoyees such as tHe Liverpool cotton warehousemen,
Monehester blotli porters, dock labourers, and sandwichmen.
Bu^ 1911, the average number of persons on the casual register,
lO iVham exhplc^ment was given in each*month, was 2,030, and
thf. number of ;basoal vacancies filled in the year was 126,304.
Tfa e^^ espondiyg fipirea for 1912 are 3,799 and 266,622.

Alp^ ^portion of casual labour is not, however, massed
ill the, SpecificalSy casual labour trades, but is scattered on the
As it we^ of almost every occupation skilled and Unskilled;',
bbismbseei fr^uently ^take on extra hands for a diort
per^ in carder to csope with a mass of work. Such businesses as^
others either from the naturg of the Work or Oh;
dl^untrdif the. relatively high standing costs of machinery, in the
' 1 ^ 0 . 88.-“Voi., xxm. ‘ .»

THE ECONOMIC JOUBNAL

[MABCH

habit of filling up immediately the place of any worker, who is
away temporarily owing to sickness or for any other cause.
Thus a spepial class of* “spare mefi*' tends to arise, for example,
around gas works, street cleansing de^rtments, and tramways in
all large towns. In Lanfeashire the “sick weaver “ is a recognised
institution,^ and the Lancashire Labour Exchanges open at
5.45 a.m. on purpose to immediately the places of textile
operatives who are absent when the factory opens.^ Finally,
there’ is inevitably a* considerable proportion of engagements of
labour which terminate after a very short period owing to the
faihire of the workman and employer to suit*i5ne another. Every
Labour Ey change manager know^s the type of workman, often
peripatetic, who “can’t keep a job,” owing to some defect of
character or (perhaps not infrequently) some st eak of divine but,
as things are, unfortunately placed, genius. And every local
trade unionist (and, it is to be hoped, every Labour Exchange ^
manager) knows the firm where the works uij^iager or 'foreman
has a rough tongue* or an instinclive dislike of standard rules,
and w^here consequently “men will not stick it,” and a consiTter-
able proportion of the \vork gets done only with the aid of new-
comers ignorant of the firm’s reputatiorj.

All these various causes prodia-e the phenomenon of casual
employment in primarily regular ocicupations.* Since 191 J the
Board of Trade have recorded the number of bituaAioujS fur adults
amongstf those filled (included on th.^ ordinary rcgiste^. vhich
are known to have been of less than one vvecsk’s durai ion. The
number was 86,04H in 1913, and ia 3912, being ]8’2

and 24*0 per cent, re^fipectiv^elj' of aii va-'^uicieo for adults filled^in
those years. Thfese figures do jiot iinply tiiat tbe Exchanges are

tending, or might tend, to encourage casual engagemtnts of «

^ See, e.g,f the report of e, case before the Colne Countj^* Court with regard to
the Insurance ContnbubioDS of ‘*sick weavers. JI6th
January, and 13th Fohriiary, 1913,

2 In the Yorkshire woollbn and worsted industries the employers fjre inore
willing to let a loom stand for a few hours or a di..y or so. Tljis probably explains
the fact that of the vacancies for adults filled by the Exchanges in 1912, a
much larger proportion were known to be temporary, iif the pense of being of less
than a week’s duration, in the cotton industry than in the woollen and worsted
industries. The exaot figures are as follows : —

“ Temporary,"
vacancies
filled,

6616

642

187

% of “ temporary "
to all vacancies
filled.

26-6

12-3

‘•i'l

Cotton

Woollen and worsted .
Other

1W8] SOLUTION OF THE CASUAL LABOUR i>ROBLEM

labour.^ The increased proportion of tempprary placings in 1912
is due to the operation of section 99 of the Insurance Act (see
pp. 4 and^l, below), which lias enabled *th| Exchanges in some*
places, particularly boutfi Wales, to secure a. control of the
engagements of labour in the ifuore casual branches of the insured
trades, a.g., ship repairing.

It was re<»ognised from the first^hat some special machinery
would be needed for dealing with large bodies of casual labour.
Merely to fill casual labour vacancies of this type through an
ordinaiy Labour Exchange does almost nothing towards imapeff-
ing the condition ‘of things, ex^iept in So far as it accustoma
people to the use of the Exchange, and prepares tljp way for a
more definite organisation and policy iu the future. Special
glans of organisation are needed for each large local mass of
casual labo* r, where such exists, and for gathering together
scattered fragments of casual labour, wherever this is possible.
Any sugb speci54l plans must deal with two essential points
(though they may also include other methods of increasing
regularity of employment). In the first place they must ‘establish
some method of controlling the influx ol* labour into a casual
labour market. Secondljr, they must endeavour to increase the
mobility of labour within the market. The first special scheme
for dealing with* a mass of casual 'workers was applied to the
Clolh Porters of Manchester. In the warehouse quarter of that
city thejp are*some hundreds of men (perhaps four or fiv^ hundred
in all) who make a living almost entirely by loading a^d unloading
cotton cloth from “lorries” in the street. Th4y are taken on
bj; the hour (and after the first hour by^he half-hour). The
normal wage is seyenpence an hour, but some of the “bleachers’
porters,” who have to carry heavier bales, receive ninepence or
occasionally tenpence. The ntimbej* of different employers appears
to be considerably larger than the number of men, but many
of the*former may only require a man once in a few weeks.
Th6 npmber of those who, on the average, require at least one
man once ^ week, is not very far in excess of a hundred. The
demand for the men .is partly caused by the fact that the police
object to “lorries ” standing in the streets longer than is absolutely
necessary. Up to May, 1910, the men hung about the streets
and the public-houses on the chance of a job. Empfoyers or
their representatives naturally got to know a certain number of

* Th# contention of •Mr. J. St.G. Heath, in the Economic Aubnal for
September, 1910, that the German Labour Exchanges,^ through their ordinary
operations, had |)robeh:)ly encouraged casual engagements, was warmly denied in
Oerman^f. See Dm' ArheitmnarlUt March, 1911, pp. 456-6,

B 2

THE ECOKOMIO JOUKKAIi

[MABCH

more or less reliable men, and where these could usually be
found. It would have been difficult to imagine a more purely
casual syst^ of ei^ployment. In May, 1910, howj^ver, 56 of
the employers were persuaded by the L*abour Exchange authorities
to jcombine in supporting* an attempt to organise ihe labour of the
men. A special Labour Exchange (with a waiting-room, in-
cluding a cheap temperancey-estaurant) was opened in the centre
of the wajci^house distVict. The 56 employers in the scheme
agreed to send for their men to the exchange whenever they
tt<Sig^ed them, and to refuse to take men ofl* the street. , A man
wa^ only registered if he obt^tiued a card^*fromiian, employer
containing^ statement that he had been pieviously employed
as a cloth porter. It was the general prac^.tice of employers to
ask at the Exchange for a particular man, and to take others onl^
if that man was not available. From the first the Exchange
found itself sending the same men frequently two and even three
times to different jobs during a single day. Th^ number of firms
^using the Exchange increased steadily. The number of men
applying for work at least once during each month varies greatly
owing to a number of 'causes. The largest and smallest number
was 513 and 228 in 1911, and 455 and ^2 in 1912. The average
number of men, for whom in eacli month w^ork was found was
238 in 1910, 240 in 1911, and 264 in 1912. toie total number
of separate jobs provided in each month averaged 5,)75 in 1911
and 6,100 in 1912. The numbe»' ot days in each month ah which
each man worked, for \v]io;n (mployment w^as ^oand at all,
averaged 12 in* 3910, 10^ in lOil, and 15 in 19i2. It is said
that, on the average,* over 100 sepavau* employers are now us^ng
the Exchange in each week.

Casual labour was discussed in Parliament on several oecasions
in connection with the Insurance Bill in 1911. Section 99 of the
Act contains provisions which aim at facilitafting the work of
the Labour Exchanges in dealing with the problem. “ It lays
down first that the B6ard of Trade may undertake thrCugli a
Labour Exchange the duties of employers under th^ Act
stamping cards, &c.), in respect of persqns in their employ at the
time when the arrangement was made or subsequently engaged
by them through a Labour Exchange; and secondly, that in
respect 6f such workmen different periods of employment of the
same workmen or of different workmen may pe counted as a
continuous employment of a single woi^kman, in so far as the
employer's contrihjitions for Unemployment {but not Health)
insurance are concerned. Under the Unemploymeht (unjike the

1913] SOIiUTION OF THE CASUAL LABOUE ^BOBLEM 5

Health) Insurance Scheme, each separate period of employ-
m^t within a week (whether by the samp employer or not) has
to be accompanied by a separate cotftrill^ution. Under the
original draft of the insurance Bill, the full contribution of 2Jd.
had to be paid both by the ijL^ployer and by the workman^ in
respect of each period. But the Act as finally passed provides
that, if the period of employment do|^s not exceed two days, only
twopence each shall be paid by the empidyer and workman, and
if it does not exceed one day onlj a penny shall be psSd by
each.

The notxeffect of these provisions id practice is to afford,
three inducements, which a Labour Exchange is enabled to
offer employers, ip order to induce them, to engage their labour —
^d especially their casual labour — according to a definite plan.
In the first p'ace, it can offer to relieve the employer of a certain
amount of trciible and expense (amounting in the case of the
larger firms to the cost of one or two clerks) in keeping and
sta^nping Health Insurance contribution cards and Unemploy-
ment Insurance books. Secondly, it can enable a group of
employers to apportion the total cost of insurance contributions
of both kinds amongst th^uriselves, according to some plan which
avoids the uncertainty, due to the fact ti t it may be more or
less 8 matter of chance who happens to be the first employer of
a casual worker in a week, and therefore has to pay the whole of
his HeaiLh Insurance contribution. In the third ptece, the
employer is differed a small direct .financial advantage as far as
concerns the contributions of men included in ’the Unemploy-
ment Insurance scheme. The Board of Trade has offered to
employers of casual labour a fourth inducement to join in
decasu^lisa^ion schemes, which is perhaps of more far-reaching
significance than any of the bthcri;. It has undertaken in more
than one centr^tef pay wages on behalf of the employers, so that a
casual worker employed by three or four employers during the
weeli may draw all his wages at one placd. A charge is made by
the Board «of Tfade (in the form of a percentage, either on the
employer's insurance* contributions, or on the wages paid on his
behalf), for the clerical work involved in stamping catds and (if
this is also included) paying wages.

The arrangements offered by the Board of Trade in connection
with the Insuraivje Act were applied to the existing Manchester
Cloth Porters’ casual labour scheme as soon as the Act came
into operation. About eighty employers agreed to engage all
their oioth porters through the special exchange, to share the

THE ECONOMIC JOTJENAL

[MABCH

total cost of their Insurance contributions amongst themselves
(roughly) in proportion to the number of hours of work wbpb
.they provide^ for eii^er one or several men,^ and hn%lly to pay
all their wages through the Labour ilxchange. The Board of
Trade adds 25 per cent, to the amannt charged to each employer
for*insurance contributions, as a set-off against the work done in
keeping and stamping cards ^nd paying wages. A short time ago
it was found that the aVerage amount charged to each employer
for ea^h man employed during the week was Ivffd. The number
o?£k^jnployer8 in the scheme has gradually increased to 11&. The
Jotal amount of wageS paid in each week varies from about
d6150 to £1§P. During the first week or two the men objected
to receiving a weekly wage instead of casual payments in return
for casual work. In order to meet this, employers continue^
to “sub” a portion of the money earned for a short time, but
now the men are paid only on the Friday afternoon at the
Exchange. The men are not com])elled to leavr their insurance
contribution cards at*the Exchange. About ten of them w;ho
work partly for firms outside the scheme carry their cards with
them. And when (as frequently happens) a firm which is not
in the combined w^ages scheme sends to the Exchange for a man,
the man is given his card to take with him to the firm, if he has
not worked previously during the week.

The number of men included in the Manchester Clot^h Porters’
scheme b. not large; but the org‘‘i>isation is interest ing,«?because
it shows the lines on which cVv'D i he most casual of labour
can be treated, \ind may form tin inodel ior man}^ other such
arrangements. The liverpool Dock-., on the other hand, con-
stitute one of what may now termed the historic casual labour
problems of the country, embracing about a hundre4 tirftes as
many men as are included ainopg thh Manchester Cloth Porters.
From the time of the first establishment of the Labour Exchanges
the officials had bc’.en in negotiation with the employers and with
the men’s representati\^s with the object of working out* a
suitable scheme. The whole position of affairs *was,* however,
transformed by the Dock Strike of 1911. Till then the ‘Union
was more or less confined to the South End. After the strike
every docker became a member of the Union, and the “Union
Button ” became a sine qud non of employment. The employers
decided, moreover, to try the experiment of aceprding complete
recognition to the men s representatives, and a Dock Labour

* It is, however, arrati^d that an employer never pays morS thajii Bd. for a man
however many times he employs him, and no charge of less than Id. is mad«.

1913 ] SO1.0f‘lON OF THE CASUAL LABOUB PBOBLBM 7

Joint Committee WBS formed to "deal with all questions of employ-
ment in the port. On this committee, in conjunction with the
Board of yrade Labour Exdhangei^ Bivisiojiial OflScer, fell the
duty of working out a bch^me for organising the casual workers.
The results of its investigatione ^into the* statistics of employment
at the Liverpool docks were published in the form pf a pamphlet
by Mr. K. Williams, the Division^ Officer.^ The chief f^cts
ascertained in this inquiry were as follows. The total number
of dockers (calculated from the Union records) was 27,200.^ The
largest jaumber applying for work at any*pne time on the docjjg
during January, 1&12, was 22,Q00. The total of the lar^est^
numbers employed by each firm on any day during that month
was 28,514. But the largest number employed by all firms
together in any one day of the month (th(‘. busiest known for
many years) vas 15.673. To obtain the total effective demand
for labour on ^hat day there must be added to this figure 3,901,
representing mei^ employed overtime or on night shift during the
previous night, and 287, representing the* shortage of men at
various stands.*’ On every week-day of the month (excluding
New Year’s Day, on which many of the men are unwilling to
work), there were actual surpluses of men at various “stands”
amounting in all to from 2,435 to 4,990. But on every day
(excluding New *Yoar’s Day and a day on which there were
sno’wstoniwi) there were also at other “stands” shortages varying
from 83,^to 7^0. In the case of each of tw'o large firijiB (from
whom alone^ such particulars were published) the number of
individual men paid w^ages at the end of each o6 the four weeks
o^ the month was practically double the largest number employed
by them on any one day of the same week.

The plan whicn was finally approved by the Joint Committee
for the organisation of the tebour of the port proposed that on
and after July 15th, 1912, no man should be employed who did
not hold a Board of Trade “tally” or metal disc. In the first
instarffce, “tallies” were to be issued only to men who obtained
the signatore of a firm to a statement that they had been
employed as dockers. Afterwards the issue of tallies, subject to
the general supervision of the Joint Committee, was to be in
the hands of six committees of representatives of employers and
men for the six “Clearing House areas” into which it was
proposed to divide the port. Thus a definite system of control
of the influx of la]?ou^ into th^ port was established. It was
proposed to improve the mobility of labour in the following

1 Eeviewed in the Economic Jodbnal, Juno, 1912.

8 THE ECONOMIC JOUBNAL [MABCH

^nanner. The engagement of men was to take place primarily,
as before, at the eighty or ninety different “stands*’ along the
.docks. as soo^p as a “ stand ^ had been “called^” the men

who had not been engaged were to * repair to one of sixteen
“surplus stands,’’ where *a telephcme box in charge, of a Labour
Exchange official was established. Any employer or foreman
unaible to obtain sufficient i|ien could at once telephone to the
nearest surplus stand 6r come and choose his men in person.
The rfdrplus stands were to be grouped and connected through
tte^^six Clearing Houses. These latter were also to serve as
jcen^res for the payment of wages. Out of 67 employers who
came into tjjie scheme, 46 agreed to pay all their wages through
the Board of Trade. The remaining 21 consented to pay their
wages at the Clearing Houses, but directly through one of their
own clerks. The charge to employers for work in connection
with paying wages and stamping cards was the same “as in the
Manchester scheme, viz., 25 per cent, on insiiran^^e contributions.

, The scheme has now been in operation for over six months.
There was some opposition from a section of the men at tine
comniencement, resuliiiig at Birkenhead in a strike whioh lasted
some weeks. But the scheme is now generally accepted, since
the advantages of a control of the influx of labour from the men's
point of view have • become clear. Three practical difficuitieb
have arisen in the working of the scheme. In the &rsTi place,
there is xo doubt that a considerable proportion of •the Alien are
unwilling to take a full weelvjs work ever if thef (dn get it.
Consequently, although tlic nua^bcr )i men already registered
is sufficient to work thf*. port pn its busiest day, Lhere was actuallj^
during the end <?f 1912 a considerable sliort^e of labour on
several occasions. In point of fact, the issue of “tallies” to
fresh men has gone on fairly extensively since the starting of
the scheme. The Clearing House Committees, *whioh took over
the control of this runtter in October, 1912, appear generally to
have adopted the principle that a “ tally ” should not be relus'ed
at any rate to any man who liad previously worked as*a. docker,
though there is considerable feeling against “4;radesmen” coming
to the docks for a spell of work while they are unable to obtain
employment at their normal occupation. The total number of
“tallies” issued up to the end of each month are as follows : —
July, 19,107; August, 22,942; September, 2^861; October,
26,152; November, 27,266; Deccknber, 28,*17i; January, 29,648.
At the end of October it was estimated that about 1,000 of the
“tallies” issued represented “duplicates,” t.e., were m the hands

1913] SOLUTION OF THE CASUAL LABOUB pOBLBM

of men who also possessed another “tally/’ and that at least
1,600 were held by men who were not altogether dependent upon
the docks for a living. * ^ ^ ♦

These figures may be compared with the number of men who
have worked during each week as shown by the total number
of men paid wages^ either directly by employers gr through the
Board of Trade

Week'

No. pi-id

Week

No. paid

Week

No. paid

ending.

wages.

ending.

wares.

ending.

wages.

aOJulv ..

14,849

28 Sept. .

.. 19,608 •

7 Dec, ..

,21,370

27 „ ..

16,271 #

6 Dot. '

. 19,266 •

14 „ ..

21,62C^

3 Aug. ..

16,491

12 „ .

.• 20,016 •

21 ..

21,165

10 „

16,379

19 .

20,345

20,600

17 „ ..

18,303

26 „ .

. 20.423

4 Jan. #.

21,203

24 „ ..

18,206

j Nov. .

. 20,428

11 „ ..

22,604

31 ..

18,308

9 „

. 20,764

18 „

21,779

7 Sept. ..

18,867

16 „

. 20,213

26 ..

21,374

H „

18,448

23 ,,

. 19,868

1 Fob. ..

21,606

21 „ ..

la- 961

30 „ ..

. 20,967

8 „

21,239

The/swond difficulty which has ap|ieared, since the scheme
started, has also tended to accentuate* the shortage of mei^
which has been experienced from time to time during the busy
winter Reason. Neither the employers nor the men have really
made proper use of thg “surplus ''stands.” It is true that a
considerable nurnber of men have been placed in work through
th^ir 'Agency, the estimates for each month- being as follows : —

July (15th~31st) 1,148

Auguwfti 922

Septombor % ‘ 940

October 3,741

November 4,r}36

December » 4,820

January 4,161

February (1st to 7th) ... 331

But these figures are not large coinjfered with the total
number of daily engagements of labour in the? port. Men still
tend t& wa/k along the docks after the stands are called, if they
are not engaged. And not few^ for no reason at all other than
force of habit, will not work for more than one or at most two
employers, and will stand idle rather than take temporary w^ork
elsewhere. At a recent Clearing Hons^ Committee meeting it
was stated that cases of men failing to go to work, to which
they had been sent from.a “surplus stand,” were not uncommon.
Employers and foremen, too, sometimes refuse to make use of
the “surplus stands” from prejudice, or, after telephoning to a
“surplus stand,” take on men whom they come across by
accident^ insteaiJ of waiting a few minutes for the men sent from
the “surplus stands” All this •human “economic friction” is
exceedingly diffipult to overcome. ,

The joinl; payment of wages also has not proved an easy

THB ECONOMIC JOUENAL [MABCH

matter to organise on so large a scale. It is true that the number
of firms who pay through the Board of Trade has increased, so
‘ that now only about ^ doTien are stahding out and paying through
their own clferks. But, although the proportion of wages
“subbed ” has never been so great in Liverpool as in other ports,
such as Hull ^tud Goole, the men refused to work on Saturdays
unlees they were paid for th^ir work on the same iday. It was
* found impossible for the Board of Trade (even with the aid of
sixty supplementary clerks, who, along with a part of the regular
st®£, work all Friday , night) to make up wages for the week
beyond 5 p.m. on Friday. Consequently tfib employers have
been compelled to give “subs” themselves to the men for work
done on Saturday, in order to induce them to work at all, and have
the trouble of conducting two distinct methods of paying wages^
side by side. The Board of Trade has not yet the satisfaction
either of having established the weekly wage system on a firm
basis, or of securing a complete record of the employ me^nt and
wages earned by the Aien. ^

At the Goole docks a scheme on practically the same lines
as that at Liverpool was also started when the Insurance Act
came into operation. The chief formal ^differences are that (as
is natural in a smaller jiort) tliere are no subordinate committees
under the Joint Committed' of employers and men, which was
constituted specially by the Board of Trade, and •that tT:ie
employersb’ payments towards the cost of the scheme agj?. calcu-
lated at the rate of a half per ^cent. on wages instetd of 25 per
cent, on insurance contributions. There are only five employers
of dock labour in the^port. Wages in Goole are calculated by
the hour, and thefe is no minimum of a half-d^y's engagement,
as in rjverpool. “Subbing” has always been general. Bnt it
has been arranged that “subs” as svell as the balance of the
weekly wage shall be paid at the Board of Trade offices (of which
there are two, on opposite sides of the harbour) on the presenta-
tion of a pay ticket from«the firm. The number of tallies ifisued
up to the end of each month since the starting of the scheme
has been as follows : —

July 1047 September 1263 November 1893

August 1164 October 1303 December 1467

The number of men who received wa^es in §ach week and
the variations in the amount paid is indicated in the following
table

1913] ' SOLUTION OP THE CASUAL LABOUR P^IOBLBM

(!)■

(2)

(3)

(4)

(1) •

A ,

<2)

(3)

(4)

26 July

935

93*7

*40-8

24 Oct. ...

942

110-6

46-0

lAug. ...

863

87*7

42*8 .

31 „ • ...

■ 7 Nov. ...

999

116 1

43-6

8 „

892

87*9

43-6*

946

112*8

46-6

16 „

939

92*2

42*8

14 „

942

122-1

iS-Sf

907

88-7

45*1

21 „

1,047

1,087

*112-2

61-0

29 „

. 6 Sept. ...

903

71-8

! 45*3

113*0

48i6

878 ;

94*1

i 42-2

6 Dec. ...

1,093

1031 1

47-8

12 „ , ...

905 1

81*1

' 43-8

12 „

1,097

111-7

49-0

19 „

915 1

93*6

‘ 44*9

981

110-5

50-2

26 „

866

91*6 j

1 44*3 •

24 „

2 Jan, ..f

1,087

1,U*

80-9

*61-1

3 Got. • -

898

405*0

43*4

1041 1

10 „

966

•93*9

44-3

968 !

112-0

45-3

17 „

921

101-1 1

t !

. 44*2

^6 „ ... ;

1,062

98*0

, a.— „„

44*9

Col. (l)=:pay day. Col. (2;= number of men paid. Col. (3) -percentage of
aj^rage individual wage during each separate week to average individual weekly
wage during the whole 2G weeks. Col. (4)=- the percentage of the total wages
“ subbed” during each week.

In SunderlaxxJ there is a scheme in operation under section
99 of the Insurance Act, without any arrangements for joint pays,^
covering a few hundred dockers. Negotiations in several other
ports have not yet resulted in the execution of any plans.
In London the duty of Regularising the labour of the port was
laid by section 28 of the Port of London Act of 1908 upon the
Port Authority, which has, how^ever, power to act through other
bodies, Siich as the Board of Trade Labour Exchanges. The
Port AuJJiority claims that it has done something to dficasualise
labour ; but (Hiring the Dock Strike in the summer of 1912 many
complaints were made in Parliament and elsewhere that prac-
tjjpally nothing had been done to carry out the instructions con-
tained in the ^Act. Various circumstances, including the
geographical arrangement of the docks and wharves, and the
peculiar circumstances obtaining ^in the relations of the men’s
organisations to the employers and the Port Authority undoubtedly
render the execution of any effective and comprehensive scheme
in •Ltodon exceedingly difficult at thef moment. In Cardiff,
Swansea, JBarry, and Port Talbot there are schemes in oi>eration
under section 99 of the Insurance Act for ship repairers,^
embracing altogether 33 employers and about 6,000 men. In
various other places the Board of Trade has made arrangements
with groups of employers under section 99, and altogether nearly
130,000 men appear to be covered by such schemes. But
probably not more .than about 30 per cent, of these are casual
workers, in the sense of being habitually engageejj^for periods of

^ Wko are, oi course, unlike the docker, included in the Unemployment Insurance
scheme.

THE ECONOMIC ^OTJENAL

[MAECH

less than a week. A considerable number of them are, however,
engaged in seasonal trades. In Leicester, for example, practically
. the^^whole the elnployers in tlfe building trades have made
arrangements under section 99 witn the Labour Exchange
covering some 2,000 men. In •Liverpool a special Labour
Exchange has since June, 1910, secured the great bulk of the
engagements of cotton warehousemen without the aid of a scheme
under section 99. The number of these men normally varies
from about 4,000 in the busiest time of the winter to something
IA/q 1^500 in the slackest time in the summei;. But the work is
^ot 4 )urely casual fco a f^ery large extent.

It is interesting to compare these schemes, which have been
developed entirely with the object of attempting to counteract
the effects of casual labour, with the organisation which th^
employers of dock labour in Hamburg have buill up from purely
business motives, with the object of securing as efficient a supply
of labour as possible. In May, 1907, there was »’ strike amongst
the “shipmen.’*’ The Port Employers’ x\ssociation imported
altogether 9,022 blacklegs (of whom 5,916 came from England),
and succeeded in completely breaking the strike with the aid of
these men. They then determined to ^ace the whole organisa-
tion of labour in the port on a better basis. The foundation of
the now system was to be 2,000 “ Kontraktarbeiter enga^d
by the Association on a monthly contract, I)nt hired- out to
individual firms, who had to guarantee them at 1eas(^ a 30.s\
minimum wage, though, apari^ from this guarantee they were
to be paid for the time during which they actually worked.
It was found, however* in practice, to be im]>os&ible to raise th«
number of “Kontraktarbeiter ” to more than abqjut 1,150, as long
as individual firms had to guarantee the minimum wage, of all the
men whom they took. An iijtere.^ing device was therefore
adopted in 1910 in order to increase the number of “Kontrak-
tarbeiter.^' A number of the larger steamship lines agreed to
take an additional numtfer of ‘*Xontraktarbeiter ” on conation
that they might give notice at midday on any day^ that -the men
would not be required on the following d^y. These firms under-
took jointly, through the Employers’ Association, to find the
men work elsewhere, or guarantee the minimum wage. This
plan enabled the number of “ Kontraktarbeiter ** to be raised from
1,165 at the end of 1909 to 1,468 at^the end of ipiO. Twenty-

^ The Liverpool term “shipmen” is used in this article as the best English
equivalent of the German <tSchauerleute.’’ The shipmen ” bo^h St^w and unload
cargo, as distinguished from the quay porters who work, on shore.

1913] SOLUTION OF THN CASUAL LABOUR PROBLEM

three out of fifty-three employers of ‘^shipmen” employ at least
a few “Kpntraktarbeiter.”

It may be mentioBed .thal) there kre ce^ain fe|tures about .
the position of the “Kontraktarbeiter ” which make the whole
system odious to the German ^It^nsport Workers’ Union. The
system was introduced definitely with the object pf minimising
the chances oi another strike. The men have from one to three
shillings deducted from theii* wages each* week according to the
amount of their earnings. This amount is placed to their credit
in a sa'^ngs bank. they break their contrac‘.t the whole amount
is forfeited, and in any case they can orfly take out from tjieir^
account one-half of what they have standing to their credit above
stlO. That there is some weakness in the position from the
point of view^ of relations between employer and employed
would seem be indicated by the fact that nearly a third

of the whole number of “ Kontraktarbeiter ” leave the service of
the Port Emplnyers’ Association each year, in spite of the
economic security which is offered. The following table show^
the years of engagement of the “ Ivontraktarbeiter who remained
in the service of the Employers’ Association at the end of 1911 : —

No. afc end , Engaged during

ot 1911. 'Jm. Im 1909] i9la 19ll?

1446 2^ 262 140 , 325 496

But the ulterior objects of the employers, the relations of the
“Kontra^tarbeiter ” to trade union labour and the ccwnpulsory
thrift, are incidentals from the point of view of the system as an
experiment in the technique of organising the* labour market.
The nature of the machinery, not the spirit in which or the
authority by whqm it may be operated, is at* the moment the
important ^consideration.

The whole of the Haibburg “shipmen,” other than the
“Kontraktarbeitcr,” engaged not merely through, but actually
aty five branch Labour Exchanges situated round the harbour and
cond^ted by the Employers’ Association. Preference is given to
men holding caCirds issued by the Association and know n as “Hilfs-
arbeiter.** On^ when qo single “Hilfsarbeiter ” is available can
a “Gelegenheitsarbeiter,” or casual, be engaged. Any man is free
to go and take his chance at a “Gelegenheitsarbeiter ’’ at one
particular Labour Exchange, from which alone casual ‘*^hipmen”
are sent. An ^imploypr or foreman who wishes to engage men
takes one of two courses. He* can go and pick his men at a
Labour Exchaijge, in which case an officiiil of the Association
stauda by, takes the registration cards from the men who are

THE ECONOMIC JOUBNAL

[marob

he can earn relatively large sums of money in a short space ol
time. ^ In the second place, if the employers of a port require
on the average (slky) 7,000 men,* bi^t on twenty or thirty days
of the year require up to 12,000, they have no right to complain
if on any particular day 12,000 men cannot be obtained. If the
employers of^a port state that they require a certain normal maxi-
mum of men, then they should pay for their lahouj at such a rate
and in such a manner 4hat the total sum of wages is sufficient, to
provide a fair wage all the year round for each of those men,
except in so far as t^t Government is able, through its^ Labour
Exchanges, to find other woric for some (or all) of them when
they are not required for port employment. This may seem a
bold proposition. But it is absolutely certain that nothing short
of its recognition in practice can save the port employers o£ihis
country from the reproach of conducting an industry, which !s
as certainly and definitely parasitic as was agriculture in southern
England under the old Poor Law. ^

In point of fact* of course, there is alreaciy a considerable
amount of “dovetailing “ of casual dock labour with other emptoy-
ments, and with the -aid of organisation such “dovetailing”
could be improved.^ Such holdings or allotments may, in some
places, provide a certain amoxint of subsidiary work for dockers.

In dealing with the question of the mobility of casual labour,
it is as important to enable a certain proportion of the labour
to mov^in and out of a given market wich ease as^it is lo make
all the labour within the market mobile. On both poinis

hints may be ^jained from the Hamburg organisation. It is
certainly better to meet the occasional j^pecialiy large demands
for labour, abovti what may be teruKHl the normal maximum,
by importing extra men when the supply of ordinary registered
men is insufficient, than to go on. registering men Indefinitely.
The Labour Exchanges of *the Hamburg Port Employers*
Association are, of course, not connected with any outside *sys tern
of exchanges. By bringing extra casuals into the stheme,
they therefore incur the disadvantage of keeping ^ “ stagnant
pools” of labour on the fringe of the system. Butrin any
English casual labour scheme the natural course of procedure, if
extra men w^ere temporarily required, w^ould be to take them,
not direct from the streets, but from the registers of the ordinary
Government Labour Exchanges, so that there would be as much

• f •

^ Though unfortunately in Li^’erpool* there is no sufllciently large quantity of
seasonal labour in the summer to balance the busy winter season of the cotton
warehousemen and dockers.

1913] SOLUTION OF THE CASUAL LABOUIl PROBLEM

opportuDity as possible of “dove-tailing** the/ work with other
occupations. In dealing with the niobilily of! labour within the
market in the Liverpool anjl Goole schemes ^ ihe Board of Trade
(no doubt wivsely; abandoned any attempt to introduce any funda-
mental alterations in the methods of engaging men at the outse^i.^
In Liver])ool the eighty or ninety separate stands, with the accom-
panying system of “Umschau** (as the Germans call the
unorganised search for v^ork), still e^sists.' The sur}?lus stands
cannot yet be said to have achieved a great deal in the way of
altering.it. The Board t)f Trade waiting-rooms in Goole
are, perhaps, rather more su^cessfcil as ceiitres from which mm
are surnmon(»d to work. Ihu ihe almost fK^rfect system pf control
of engagements of lahoar in the Hamburg Employers* Labour
E^xebanges is certainly far in advance of anything in England,
and seems to jspose of the argument^^ as to the impracticability
, of reducing tla mind^er of places wh<-re men may be taken on.‘^
What German %'rn plovers c,an do in their own interest in
/!]3^5fnburg, Fjn^lish employers can do in the public (if not in their ,
own) interest in Tjiverpool, London, Glasgow, or Hull. As
regards ftie employment of do(*.kers at dilTerent classes of work
(such as stevedoring, unlyading, and porterage), there is great
variety of practice, both in English and in Gerriian poi^s.
‘Obviously, the fewer the barriers between the different classes
of W'Ork better. Probably the greatest diffTcuIty in arranging
for men tqjie transferred from one to another is the fact Wiat the
rates of wagS differ so widely. •

The arrangements for joint weekly ))ays, w-hich are being
organised by the Board of Trade, are undoubtedly valuable.
Rome of the dock^u's’ leaders hold emphatically that “human
•nature being what it is,** the system of daily pays or unlimited
“subbing** does not conduce i.o tlip expenditure of the docker*s
income in the be«t interests of himself and his family. Joint
weekly pays are thus a step m advance. But what is really
•heed!hd*js a guaranteed \veekly wage for the docker. No satis-
factory solution of the problem will he found until a man, who
does not receive a weekly niinimuni wage from a single employer,
can only be hired through a public authority on such terms as
would enable it taking into account such periods of em})l()yment
as it could obtain for him in other occupations, to procure him a
regular weekly jvage of a reasonable amount. It has been

^ But not in tho little Iflancheyter cloth porters’ scheme.

2 Although the Port^of Hamburg, owing to its geographical arrangement, lends
itself to 8c|jemes organising labour more easily than London or Liverpool.

NO. 89^— v<Jl. XXIII. ' c

THE ECONOMIC JOURNAL

[march, 1913

suggested that thb scheme of compulsory Unemployment Insur-
ance should be Extended to dock labour. But it seems to
the present writer xhat a somewhat different method of averaging
wages would be preferable in this case. Such a method
should, if possible, radically alter the psychological milieu into
which the average casual worker is forced by the gamble for
ei^iployment. All men who are not paid regular weekly wages by
individual firms should be organised into a corps or guild, which *
might in some cases be established by the local authority, and
managed in detail by a committee represergbative of it,* together
with the dockers and their employers. In this, or some such
w^ay, me^} must be paid for w^aiting as well as for working. Then,
and then only, will it be possible to require regular attendance at
centres of engagement, and to avoid both unnecessary shortages
of labour and the existence of an excessive outer fringe of casual
workers. Probably no plan of Ijabour Exchanges, unaccompanied e
by a revision of the system of remuneraticjn, wik form by itself an
adequate basis for the effective organisation of the casual labour
market, though no doubt such ])kns may in practice prepare*' the
way usefully for further organisation.

Needless to say, the wdiole problepi bristles with difficulties.
Whether, as things are, there is sufficient readiness among the
public, the employers, or the dockers, to grasp both the^
essential rights and wTongs and the essential practicaUnecessities
of the t situation, remains to be seen. Perhaps* there is not.
Perhaps the tragedy of those- wiiom ‘*no man hafE hired” will
continue to be enacted year after year under early morning
skies in the great half moons of men, which make up ^he
“stands ” along*'the Liverpool docks. But the^ efforts of the repre-
sentatives of employers and men and of the Board o^ Trade,*
especially in Ijiver])ool, have made the outlook a little more
hoiK^ful. England may yet give effective and practical recognition
to the principle that even amotfg dockers “they also serve w^ho
only stand and wait.” » * *

Frederic, Keeling

THE INTERDEPENDENCE OF DIFFERENT SOURCES
OF DEMANp AND SUPPIiY A MARKET. '

§ 1. In the treatment economic problems it is^ sufficient

to know the equations **epresenting the demand schedule and
the srmply schedule of a market as a w^hole. Other problems,
ht)wever, ca'mujt he soKod, unless we also know the relation that
subsists betw'een the aggregated demand or supply schedule and
the demand m s^^ippiy schedules, if such exist, of the separate
sources of demand or supply, of which the ma'rkot is compounded.
For* the purpose of elementai'y discussion it is usual to assume
that an aggregated demand oi sup])ly schedule is alw^ays made
up by the simple addition of a number of independent demand
or supply scliedules belonging to these separate sources. It is
^obvious that, wheifthis assumption is made, the demand schedule
of'^ery source of demand can be represented by a plane curve,
and the demand schedule of the market by a further, curve
obtained b^^^e simple coin])ounding of the curves representing
the several sources; and that the saine pro] )Osilion» holds good as
regards supply. I wish to inquire in what cinamistances the
above assumption adequately conforms to the fac^s, and, when it
• does noi so conform, what alternative assumption ought to be
substituted for it. .

§ 2. On the sidje of demand, the/asstim]>tion seems to be fully
warranted as regards commodities that are desired w^holly for the
direc/4 siitisfaction yielded by them, and not at all for the indirect
satisfaction wdiich their possession contributes through our thirst
for reputgition or distinction. On the side of supply, it seems to
be fully warranted in respect of agriculture and the extractive
industries, so far as these are carried on under conditions such
that the part played by transportation, and, tlierewith, iJie role
of “external economies” is uniiiqiortant. Furthermore, even
when the assumption is liot fully v^arranted, it may, nevertheless,
be warranted for the limited purjxise of the analysis of a particular
group of probiem^*—those, namely, which relate lo disturbances
of equilifoum so small that the aggregate output or consumption

c 2

20 THE ECONOMIC JOURNAL [MARCH

of the commodity affected is not greatly changed. Thus, as
regards demand, it) is reasonable suppose that a considerable
change in aggregate consumption is ‘necessary to make people
aware that any change in “commonness” has taken place, and,
hence, to affect that part of anybody’s demand which turns upon
the reputati6n-value of the commodity.^ Similarly, as regards
supply, a considerable change in aggregate outi>ut'' would have to
come about before the general organisation and external economies
of an industry were appreciably affected. Analytically, the point
may be stated thus. Though the quantity of commodity de-
ni^nded (or supplied) at a pi-ice p in a market consisting of
several sources cannot be approximately represented by the
expression

hv + /oP + ... ■ - ,

yet the change in the quantity demanded (or supplied) in that
market in consequence of a small change of price Ap, can be
approximately represented by the expression ^

+ /> +

In short, certain relevant variables may fairly be regarded as
constants from the stand]X)int of small changes.

§ 3. In what has just been said the two most obvious influ-
ences, whose operation sometimes renders our fundamental
assumption inapplicable to real lif(\ have been implicitly indicated.'
As regards demand, the essential matter is that people cki, in fact,
desire 'many things, not merely for tbtur own sake,^ut, in the
main, on account of the reputation or distinction which the pos-
session of them confers. Thus, J. S. Mill wrote : “ Wlien once the
means of living^ have been obtained, the far greater part of thefre-
maining labour and effort which takes place oriel he earth has for its
object to acquire the respect or the favourable regard ^of rrfankind ; ’
to be looked up to, or, at all /events, not to be looked down uj)on
by them. The industrial and commercial activities w^hich advance
civilisation, the frivolity, prodigality and selfish thirst of
aggrandisement wdiich retard it, flow^ equally from that source.”^
To it, we may add, are due, in great measure, at once the desire
for political success in England and business success in 'America,
expenditure on personal adornment and on philanthropic wmrk,
the concealment of inventions for profit and the revealing of them
for fanie,^ the purchase of pictures for the home and the presenta-
tion of pictures to public galleries. The consequence of this fact
from our present point of viev\ is obviouss The quantity of a

' Of. my paper Some Remarks on Utility ^ Economic Joujinal, Vol. xiii. p. 66.

2 Mill, Three Essays on Religion^ p. 87. Cf. also Marsfiall, Prmciples of
Economics, p. 162. *

» Cf. Chapman on American and English methods, Work and Wage^, p. 41.

1913] INTEEDEPBNDENCB OP SOUBOES OP DEMAND AND SUPPLT 21

distinction-bearing article that anyone demams at a given price
depends, not merely on the pr^ce, but also onythe extent to which
it is “the thing” to buy that article, and thus, indirectly upon
the quantity that people in general are buying. As regards supply,
the essential matter is “external economies.” WWe circum-"
stances are such that organisation and so forth can be much
bettered wheif the aggregate scale of an industry is large t£an
when it is small, the quantity of the commodity that anyone
supplies at a given price depends, rxot merely on the price, but
also on* the quantity that people in generaii are supplying.

§4. In circumstances of the kind just ’described, it is evideilft
that, though the deinand \or supply > schedule of the market can
be represented by a fJaiic curve, the demand (or supply) schedules
gf th^ separate source's I hat make up the market cannot be so
represented, .md cannot ];e simply add(id together to constitute
the aggregate 1 demand (or supply) schedule. It, therefore, be-
comes necessor^ to inquire whether, in these cases, any other
assumption of a leasonably simple nature can be employed,*
instead of the assumption of independent individual schedules
with wRich we have hitherto worked. ’ One such assumption
readily suggests itself. It is to the effect that the price at which
anybody demands^ (or supplies) a given quantity of commodity is
up by the addition of two parts, one depending on the
quantity4hat the person in question himself demands (or supplies)
and the otbe^*upon the quantity that the whole market coHectively
deintods (or supplies). On this assumption, if p be the price, y
the aggregate quantity demanded (or supplied), and yr the
quantity demanded (or supplied) in the source,

p = ^ ^y.

This formiiJa is readily translated into the language of diagrams.
The situation is the same as it would be if the commodity in
questian consisted of two physical constituents. For one of the
^ congtituents the market demand (or supply) curve is already in
being, Isince the demand (or supply) price is known to depend in
a. definite •manner on the aggregate amount. The other con-
stituent 'is demanded (or ^Jiipplied) by the several sources in such
a way that the demand (or supply) price in each source depends
solely upon the amount in that source. The market demand (or
supply) curve for the second constituent is thus found by*a simple
addition of the ^curves tfor the several sources. We have only
then to superimpose? the curve fdr this second constituent upon
that for the first, to find the complete market curve for the com-
modity.* The question we have now^ to ask is : Does the assump-
tion just described represent the facts of life closely enough to

22 THE ECONOMIC JOUBNAL [MAEOH

be of practical vaiae in any of those cases to which, as we have
seen, the simple Assumption proper to elementary discussion is
inapplicable ?

§ 5. I suggest that, on the side of supply, a field is available
'to which this assumption is not, indeed, perfectly adapted, but
is sufficient!}" adapted to yield some fruitful results. In applying
it to this field, we are, it must be granted, ignoring the fact that
the effect on the suppfy price of the source of supply brought
about by a given change in the output of that source may itself
be different, according as the aggregate output of the whole
ir^arket is large or small. Nevertheless, we are approaching njuch
more nejirly to real life than w"e are permitted to do by the
method usually adoi^ted. In particular, we are enabled to fit our
analysis more closely to the difficult problem of increasing r-^ turns.
On the ordinary method, a market schedule indicative of increas-
ing returns must be made up of a number of schedules of inde-
pendent sources, some, at least, of which also iiidicate increasing
returns. A system of that kind, however, is necessarily in un-
stable equilibrium. Apart from obstructions due to the time
element, to which Dr. Marshall has called attention, it wouldiseejn
that one of the suppliers must drive', all the others out of the
market. In real life, however, as Professor Chapman has well
emphasised,^ when the commodity is one whose productiop'
requires the help of subsidiary industries — a need attaching to all
increasing return commodities — the separate sourced are. not renlly
independent, and the presence of Increasing returns^m the market
as a whole does not really imply i(s jiresence in the parts. In the
phraseology emjiloyed above, the “constituent of the commodi^^y,
which the sources produce independently, mgy obey the law ot
diminishing returns in all tlie sources for any aggregate of-produc-
tion, while the other “constituent^ obeys the law of increasing
returns rapidly enough to give the character ofe'increasing returns
to the supply schedule of the two constituents jointly. Tt is, thus,
seen that the apparent conflict between mathematical analysis and
experience, which has often perplexed the treatment ol increasing
returns, may disappear even withoiit reference to the time
element, if the assumptions from which the mathematical analysis
starts are brought more nearly into conformity with the facts.

§ 6. 'For the sake of symmetry and formal niceness, it is much
to be wished that the formula, which is^thus seen to have value
as regards complex supply, coiikl also be fitted, without too serious
violence to reality, to tne facts of complex demand. Unfor-
tunately, however, it must be confessed that this cannot, be done.

^ Economic Joubnax., June, 1905 , p. 191 .

1913] INTERDEPENDENCE OF SOURCES OF DEMAND AND SUPPLY 23

First, in order that the formula may be applilable, the group of
demanders making up a market must be so faf homogeneous that
the desire for the possession of a unit of commodity on account
of its distinction bearing quality, when a given aggregate of it is
being consumed, has the same iioney value to each member
the group ; and t-his condition is obviously unlikely tp be fulfilled.
Secondly, the formula imjilies that the ‘‘part ” of a man’s derniJad
price, which does not depend on the qu&.ntity of a commodity
that be is purchasing, depends simply on the aggregate quantity
that the market is purchasing. This condition would be fulfilled
in respect of a commodity that was |>artly "desired for the disti^ji#**^
tion given by being “in tL^ swim” in general {e.g., toj^ hal^O, or
for that given by being out of the swim in general (e.g.,
diamtods). In t'aci , however, distinction is usually to be found,
not in'being n the swim in general, nor yet in being out of the
swim in gene al, but in a combination of resemblance to certain
persons and of • difference from certain other persons. If the
consumption of a commodity increases amolig those classes witl^
wfiom 1 wish to be associated, my demand for it increases, but, if
the aidsumption increases among those from whom I wish to
separate myself, it decrejjses. Suppose, for example, that I am
the mayor of a ^u’ovincial town. In that case, if the Victorian
^rder becomes a more ordinary decoration for marquises, my desire
for the decoration will be enhanced, but, if it becomes a more
ordinary decoration for crossing-sweepers, I shall be tempted to
regard its jlffesentation to myself aaan insult. Furthermore, both
among the persons whom a man wishes to resemble, and among
tfiose from whom he wishes to separate himself, some are usually
much more important to him than others. Thu^, a given addition
to thef aggregate consumption of anything will alfect iny demand
price for a r*'' unit of it quite differently if the addition is caused
by extra purchases distributed over the public generally, or by
extra purchases on the part of one of my heroes. Caracalla buys
anibel in honour of his mistress’ hair ; amber becomes a craze
in Italy. • A princess is lamed ; court ladies limp. Majesty re-
ceives the “General” of a religious body; the inverted commas
depreciative of his “generalship” disappear. When a royal
personage condemns a barbarous fashion, the osprey yields to
artificial flowers; just as, wdien insiders, or, perhaps,- a single
celebrated opergitor, b^r or bull a stock, outsiders follow blindly.
As Jevons observed long since, people go to places of recreation,
music, or art, because other people of a class just superior to
themselves ^re likely to be there : “Under the circumstances,” he
wrote,»“it is, as it seems to me, a positive duty on the part of

THE ECONOMIC JOURNAL

[march, 1913

fche middle and iipter classes to frequent the well-conducted places
of popular recreatJ^Dn t6 help to raise their tone. If, to induce
them to do so, they must have royal or titled ladies to flock after,
then I hope that those who enjoy the wealth and the i>rivileges of
^ this kingdom will bear in mind that they have duties also.” ^
The principle involved is of wude application. It indicates the
laJ'ge extent to whi(*h leaders of society are able to direct the
admiration and emulation of the public, and thus to encourage, as
they will, literature, philanthro])y. yacht-racing, or contributions
to the party funds. , ' *

§ 7. To represent • the complex conditions described in the
preceding pa ragrajd!, the formula set out above is wholly inade-
quate. The demand of any r*'' source of demand in a market
cannot be translated into any expression more Fimplo iha]^this :

P ^ -i- Ml + •••

where the signs preceding Ihe various terms jnay bo either j)osilive
or negative, and where all that (%an be said in genejal is that each
,tei'm (whether it is ’positive or negative) is likely to lie larger,
the larger is the argument contained in it/- In cases where tlu*
influence exerted iqxm th(‘- demand schedule of source^ A by a,
change in the consumption of source J3 depends in part on the
conditions prevailing in one or more oi the other sourees, e\en
this formula is too simple, and it is necessary to fall back on tlje -
general expression : —

r P ~ M/r, p],

When the conditions are such that the demand scliocU.b^ of the
separate sources in a market must be represented by formula' of
this complex kind, problems, for the investigaiion of which it^^s
necessary to go 'oehind the demand srhcdule qf the market as a
whole, are still, theoretically, soluble; there are a siftticient
number of equations to deterniine the unknowns. The solution,
how^ever, must needs be an algebraical solution, and no trans-
lation into the language of jiiane diagrams is j^ossible.^

A. G. iVciou

* Essays on Social Ecfornii p. 2^1 .

The above formula must also be invoked on the side of supply when the output
(at a given price) of a typical lirm in one district dependent in a much greater
degree upon the organisation (as represented by output) of other firms in its
immediate neighbourhood than upon that of other firms in distant parts of the
world (cf. Maegregor, Industrial Combination, p. 27).

^ On the general problem discussed in the above paper the reader may be
referred to the original article of Sir H. Cunynghamd' on “ SeCne Iinprovornent in
Simple Geometrical Methods of Treating Exchange Valites, Monopoly and 3^.ent ”
(Economic Jouenal, \ o 1 . II. pp. S5 et scg.), to a review by Professor Edgeworth of
the aamo author’s work: “A Geometrical Political Economy” {ibid., Vol. XV.
pp. 62 et scq.), and to an article by the present writer entitled ; “ Some Hefnarks on
Utility ” {ibid., Vol. XIII. jip. 59 et scq.). t

THE UTILITY OF INCOME AND rBOGEESSIVE
TAXATION.

The r^iirpose of this papei ist to bring forward certain caijii
siderations bearing upor the relation between Utjlity^ ancT"
Income and the practi(*il application of the commonly accepted
doctiine, which ir»{iy seem to be of a somewhat heretical bent.
Tts ai^ninen^ falls naturally into three parts : (1) a constructive
treatment of the relation between Utility and Income ; (2) an
examination df^ certain fundanicntal grounds on which the law
of diminishing utility, as commonly inter|5reted, has been sup;
parted; and i3) a discussion of the ‘ilieged connection between
the pnliciple of progressive taxation and the law of diminishing
utility.

The best way of making clear the fundamental notion to
J)e expounded is*to approach it gradually. First, then, we may
notice tJiat, even if income is generally subject to diminishing
utility, there are certainly points of discontinuity too i/nportant
to be OT^tlboked. Thus in Fig. 1, units of income being
measured along OX and units of utility along OY, let the
successive ordinates of I(j represent the iiu*reases in the total
utility of incom^ to a given person^ as incflme advances up
to Ob? When his income is Ob, say, he decides to have a motor
car; and, in order to have very simple case to deal with, let
us imagine that, the possession of a motor car would not in the
least affect the manner in !\diich he would spend income on
otKer^ things or the utility attributed to them. Suptxise the
cost of jUe car*, expressed as a continuous annual charge, is ub.
Then “ihe annual value of the car to him must be af w^hen b/ is
such that cde==efg. Now, if, after getting the car, his income

, ^ Utility is taken merely as a symbol representative of degrees of preference or
ohoioe, which are not to bo regarded as necessarily measuring impulses or feelings.
TVirougb choices or decisions subjective human experiences are transformed into
action. liy “ utilii^s ” I m^n the quantitative relations between these decisions
or choices, which express^ while leaving stflreened, the internal happenings which the
psychologist studios. (See also page 33.)

* Throughemt thlb paper, to avoid circumlocution, individuals will invariably he
spoken 8f, though it would frequently be more appropriate to speak of families.

THE ECONOMIC JOUKNAL

[mabch

still increases, the ’curve of the new marginal utilities will obvi-
ously start at h (when hb = da ) , and fall from that point ; for the
car has displaced the things which brought the marginal utility of
money below da. So, when this })erson’s income is a little less
than Ob, its marginal utility approximates to bg : but, when it
is a little more than Ob, its marginal utilitj approximates to bhy
which is substantially greater than bg. r

This demonstration holds of all expenditure on costly things,
on the assumptions stated. But we cannot stop at this recogni-

d • h

O' at. X

Fig. 1. *

tion of discontinuity. The new ex])ensiye thing, besides cljsplac-
ing certain things, may alter substantially the values attributed
to other things — and is, indeed, almost bound to do so in some
degree — so that a thorough-going rearrangement of the scheme
of consumption in question is involved* Most schemes of con-
sumption are discovered on close inspection to be coherent
systems (of an organic nature, as one might say) the j)arts of
which fit into one another and determine one another’s subjective
value. Nor is this all. It will be fousd in addition (as the
doctrine of class standards of IKing lays it down) that different
schemes of consumption are as a rule variations of certain
distinguishable types, which are kept comparatively intact over

1913] THE UTILITY OF INCOME AND PBOGRBSSIVE TAXATION 27

lengthy peridds by habit and social assimilation, though they
are never so well-defined that their existence cannot be over-
looked. Objectively viewed these typt s may merge into one
another, but subjectivt'.*y — to the individual — they exist as dis-
continuous. People usually advance in the social scale by distinct
steps.

Let us consider the effects of sjjencling different incoHies
with rehirence t6 some sj)ecific standard of living the cost of
barely realising which is £300 a year. When the income is
just about £300 year, and the standard is aimed at, the
person in question feels pincdicci — that to say, the marginal
utility of money to him i.. high. When, on the contrary, the**
income is well over £ 30 : i a year, he feels himself to be in easy
circirnstances — th.at to say, tb(‘ margin.il utility of money
is lov^. Tnf case, up to a ]>oint, is analogous to the much-
quoted one O’* the colieeior who aims at a complete collection.^
As in that casfi, so in this, the marginal utility gets greater as
the object pursued is approached. Hence* it w^ould seem as if
incomes devoted to realising a given type or standard of expendi-
ture oTbeyed some such law' as is exhibited by the curve of

marginal utilities gfj in^Fig. 2, where the axes stand for the

same as in Fig. 1.^

Next let us consider what happens to the adaptable person
wdien bis income advances from about £300 a year to a consider-
ably larger ohe. Ijet the curve gf j indicate the successivc^additions
to total utility as his income varies when he spends it according
to the £300 standard. Sooner or later, however, he alters his
fotandard of living. Now tlie law of utility with res])ect to the

new' type^ wall bq, of the same order as that with respect to the

old, but the maximum of marginal utility of money will be
reached, say, at £600. Let the curve gh in Fig. 2 repre-
sent, the variations of the marginal utility of income with
refeience to this type. This curve must, for a time at least,
rise "-less steeply than the curve gf because increments of
income just in excess of Oa have relation to a further removed
end when expended with reference to the higher type.^ Let us

^ The reader may be referred to Dr. W. R. Scott’s admirable analysis of this
case in bis paper printed as one of tlie monoj^raphs published by St. Andrews
University at the time of its quincentenary celebrations.

^ The shape of the curve probably resembles that of a lop sided cocked bat. But,
despite the more gradual <4esceiit on the right, the curve must soon got close to
Ox, so far as the indivyiuars expendittye on himself is concerned, because many
possibilities are excluded by the constraints of the type.

^ For exai®ple, «aoiiey laid out on clothes, when the lowest typo was aimed at,
would iJe spent with a view merely to comfort ; but, when a higher type was aimed

28 THE ECONOMIC JOURNAL ^ [MARCH

suppose that the minimum income necessary for 'Subsistence is
Oa, and ignore any utility connected with this. Then the higher
standard will be adopted when inconfe is Ob, Oh being such that
gfe~cde. So, as income advanced from a to k (on the assump-
tions that there is no simpler type of expenditure than the one of
which the yariations in utility are shown by the curve gj, and
that yet a third ty))e of expenditure is not assumed) the marginal
utility of income would be traced out by the line gfcdh, those
parts of the curves w^hich are marked gd and cj remaining hypo-
thetical. In Tig. 2 expenditure according to" tw^o standards only

is admitted, but, of course, more than two might have ,/.o be
allowed for.

A few words may be said here to prevent any misunder-
standing as to the nature of the curves of marginal Utilities of
income in Fig. 2.^ Neither curve must be confounded with a

af, some comfort would be sacrificed to appearances, though the sacrifice would
yield nothing appreciable in utility till income was large enough for the t3rpe to be
substantially realised. It may be remarked that there seems to be no unanswerable
reason for supposing that the peaks of successive curves like those in Fig 2 could
never, even for the shortest period, range upwards in hfeighij fcoi& left to right.

,7TJ •

* The equation to each of them is y — - when V stands for utility and for

income, and an assumption is made in each case as to the soandaird of living to
which expenditure has reference.

1913] THE UTILITY OP IllCOME AND PBOGEESSIVE TAXATION 29

successive utility curve. By the letter is meant a curve whose
ordinates stand for the incremental additions made to utility
as equal units of an income of a given amount are successively
spent, on the assumption that each unit of income in turn is
laid out so as to realise the gieatest immediate utility, con-
sistently, nevertheless, with the end finally desired,; or, to put
the same thing in another way, a curve whose ordinates niiftk
from right to left the sacrifices of utility that would be entailed
were the things purchased with the income instantly removed
in the order in which the consumer wouid elect io relinquish
them, all things being taken in units of ^qual cost. For every
size of income a curvp v i successive utilities can d^^awn
theoretically. Now for an income of any given size, sav Oi, the
sum of the successive* utilities ('apart fron? fch^3 utility of the
miiiim’hm inc >me Oa) would, of course, equal aiefg if gfe is the
curve of the ioarginal uHlity of income as previously explained.
But, for such a^i income, the final one of the successive utilities
would be greater than ei, and the initial ode would be less thai^
ag ; and similarly for all other sizes ol income. The larger the
income the lower is the initial one of tlu^ successive utilities
(beyond the necessity nynimum), because it is spent in some
degree with reference to a more distant end. The extra height
of the final successive utility over the marginal utility of
income .is caused by the fact that cjr Jiypothesi the former,
regarded as *a sacrifice, cannot be reduced by modifying the
expenditure of the rest of the incocne when the sacrifice is made.
Further, it may be observed that, when the cRrve of marginal
%itility of income begins by ascending, the curve of successive
utilities must asc^d at first. It might be thoii^t that the latter
could^not because it expresses, when read from right to left, the
effects of losing successively -wdia^ can be dispensed with at least
cost ^f utility. But this reasoning is unsoiuul, as can be demon-
strated formally as follows. Tf x and y are two things, or two
group® of things, consumed, and V xh/ stands for the utility of
X and y when traken together, Ux for the utility of x in the absence
of y, and Up similarly for the utility of y in the absence of x;
then the reasoning implies that :

(i) Ux-\-y Ux'^Ux
can be directl; 5 i, deduced from :

(ii) Uxly>Ux>U,

and obviously “it cannot (see also page 32). When this false

30 THE ECONOMIC JOURNAL [MARCH

inference is drawn, the erroneous assumption (implying an
atomistic view of experience) is ipade that :

Uff.

However, it ordinarily happens that, when (ii) holds, (i) holds
also.

«'It seems likely that the curves of Fig. 2 aivl the relations
between them are such that the individual w^ho is not very poor
is generally, if not always, on an eastern slope, so to speak.
When he steps to thcy/higher type, ho comes,, as a rule, to such
a position that money in his rew^ circumstances is still subject
lu diminishing utility. So there are jumps; but there is seldom,
if ever, any continuous increasing utility of income w^hen people
are not passing out of a state of extreme poverty. Nevertheless
— and this is the important point — the view' here expoundc J does
involve the hard saying that the marginal utility of irirmey may
be greater to a man after his circumslanct^s have improved.^

I am sure that this "is so in an appreciable number of cases ;
t think it is not infrequently the case : and it may be the ruling
case when certain income limits (which vary with the individual)
are passed by inconsiderable amounts. It is a (Common exj)eri-
ence to meet with people who have obtained a slight accession
of income, and whose enjoyuKuit of life has obviously been
increased quite out of projiortion to the accession of income.
This cannot be explained satisfactorily If additions to income
can only bring diminishing additions to utility. Such peojde
(after taking a .larger house, say) are quite likely to be more
careful about casual exjienditure (though possibly careless wdtb
pence for reasons to be expounded), and people do not get more,
careful with things as the things fall in value to them. Again,
the w^astefiilness, or open-handedness, of many unusually well-
paid working men long after their old habits, formed wdien they
were much }X)orer, have had time to crumble away, as con-
trasted with the penurioiisness of many men in a somewdiat Ivetter-
paid economic class, at least suggests that the mar-ginal, utility of
money is less for the former than the latter, if the two marginal
utilities may be compared (see, below, pag(^ 83). Illustrations
might be indefinitely multiplied. Of course, the ultimate test
is furnished by the judgment of })eople who have had, in a reason-

1 It should be pointed out that the doetrne is involved also ih such a case as is
dealt with in Fig. 1, which does T^ofc iuoorporaie the fundamental notion here
advanced. Such a case might be waived aside as an exception, but I should doubt
whether, in view of the many very expensive items in the budgets of the rich, the
number of such exceptions is so few thet they may he lightly dismissed.

1913] THE UTILITY OP PJCOME AND PROGRESSIVE TAXATION 31

ably short period, wide experiences Of different incomes and who
realise the points at issue ; but, unfortuhately, most people are
not good at introspection. •

II.

It behoves us now to consider the c^ief reasons fftr which tjie
view opposed to that advanced in this paper is held. Three main
reasons are ordinarily given for the view that the utilit}^ of money
invariably becomes less to a man when he becomes rich. Two
are empirical, and the other is c 'priori.

Empirically, it is pointed uut rhat, when well-to-do. a
apt to be more careless about pence thriii when he is not su^eb off ;
which must mean, it is said, that tht' penny has a lower marginalia
utility ^0 him in the iurmer case. But must it? The following
explanation is equally plausible for many instances, namely, that
the penny ceas^^4? to hguio as th^' unit of account in deliberations
about exp«ondirure when a man achieves .wealth. The penny
might have lisen in utility, but, ncwertheless, be neglected*
because^ of the greater aggregate utility of incomeo l^ime is
too limited, in relation to the income to be spent, for the rich
man to think of a penny-*-or, so to speak, his wealth makes his
leisure too valuaWe for it to be worth bis while to throw it away
in de\.‘sing plans for the saving of pennies.’ The poor man saves
])ounds by loc^ldng after the pence ; but the rich man, by looking
after the pence, would lose pounds in value. Moreover,* there is
this further consideration, that the rich man is encouraged to
think in large units by th('. high average ])rice of the things bought
iTy him. So, des})ite the rich man’s carelessns^ss about pence,
his money might •have been endowed with an access of utility
on his becoming rich. In instituting a comparison, obviously
we must not take as the standard unit a sum which is disregarded
in OIK! of the ca*ses compared.

Again, still empirically, it is maintained that the richer a man
is the higher is the pay needed to induce him to do more than a
given amount oi w’ork ; and that this must be because money has
less utility to him when he is rich. But, assuming for the sake
of argument that the first statement holds universally, the con-

^ The explanation may be put crudely in this way. A man with, say, £200
a year, has 48,000 penny units of expenditure per year to think about, and he has
just time for the t»sk. But* a man with £500 a year would have 120,000 units
of expenditure to think aljout if he made#the unit of account the penny, and for
so extensive a task ho might not have time. He, therefore, makes his income
manageable bjfc fallyig back on a higher unit of account and thinking of the
problem m made up of 60,000 twopenny units or 40,000 threepenny units.

THE ECONOMIC JOURNAL

[march

elusion drawn does not necessarily follo'w. Greater wealth gener-
ally means that leisure has a higher value, so that a larger absolute
sacrifice is made in undertaking extra work when a man has
become wealthier. Moreover, in the case in which the greater
wealth results from greater earnings, the person iii question wall
obviously be unwilling to under-cut himself, so to speak, by
aiscepting wwk at a low i*ate of remuneration; and, apart from
this, he will naturally take into account that the time given to
the low-paid work might reduce his capacity to earn at the highly-
paid work. These copfeiderations make it evident that any abbre-
viating effect w’^hich rising incomes may have on the time given
earning can be explained without reference to the marginal
utility of income.

^ The a priori argument puts it that the mobt- pressing wants
are satisfied first, and that as w-e get w^ealthier less |cressihg
w\ants are left io be satisfied, so that in satisfying them we get
less utility. This argument seems so convincing because it is
self-evident in one sense, which, luwvever, does not hapj)en to
be the' sense that must be read into it w hen a contrast is drawn
between incomes of different sizes. ^J’'he mere fact- that, wdien
I have £200 a year, 1 buy six imitation (liippendaie chairs, rather
than a single genuine one w'hich ('osts* as much as the other six
put together, proves that J prefer the six imitations to the one
original chair when I have an income of £200 a year.^ But it
does not prove that, wlien 1 have the larger incctrae and have
bought the costly t^hair, and pompaie my enjoyment of it under
the new income, conditions with my enjoyment of the six cheap
chairs under the old income conditions — that then 1 must judg^'
the former enjoyment to have been greater than the latter.^
Some of the defences of Ihe doctrine that the inarginainitiliiy
of money must alw^ays be less for the larger tlian for*the smaller
income are, it would seem, less impregnable ^han they appear
at first sight.

ITT.

Another important line of defence remains. Some of my
readers may be prevented from according full assent to the
notions brought forw^ard in this article by their accej)tance of a
principle of taxati«m that is steadily winning the ^jonfidence of the
public, namely, the progressive principle, ♦which recommends
taxing the higher incomes ai a higher rate. This principle is
^ See also pp. 29, 30.

1913] THE UTILITY OF INCOME AND PROGRESSIVE TAXATION 33

not uncommonly deduced from two propositions : (1) that equal
proportional sacrifice should be* entailed by taxation, and (2) that
the marginal utility of mcome falls continuously in such a way,
as income increases, that taxation of all incomes at the same
rate would cause proportional sacrifice of utility to vary inversely
as income, other things being equal. ^ ^

It is first necessary to bridge the gulf which has been left
yp»wning between the experiences of different individuals (see
note on page 25), since the kind of tax^^’i^^^ refen ed to above
aims, as it is put, at making th^ sacrificec in utility or satis-
faction of different people ^qual in relation to their incq^ja^fi^r
mility or satisfaction. There is no gulf to bridge il we can
think of satisfaction as, homogeneous ^nd measurable (at least »
theoretically) as between different people.^ JBut 1 am unable to
think of it in this w’ay ; and, to he on the safe side, and avoid
dogmatising at^iut a psychological question, I never mean by
utilities or satisfactions more than conventional symbols repre-^
se»tative of tue relations between an mdiviHuars preferences.'^
Consequently, the satisfaction of one person cannot be con-
trasted with that of another person, according to this view, for
obviously no preferential relation can link the two experiences
together. However, there is no real difficulty when we come to
, a political question like taxation, since the gulf is at once bridged
by the doctrine, which is essential to much politicjil (]pctrine,
that people who in all external relations seem to be the same
must be treated as if they were the same, or, in other words,
that the State must not be a respecter of persons. In short, the
fiction on which we proceed in taxation (which need not be
• dt^xended here) is to* regard different people in the same or different
circumstances as the same jiieople in the same or different circum-
stances.

NoV, given the correctness* of the theory in this paper, the
second proposition referred to above does not hold with any over-
whelming degree of universality at least. On the contrary, it
would seem likely that, in many cases, a man’s proportional
sacrifice of utility would be increased when his income became
greater, were his income still taxed at the same rate. Does
acceptance of the ideas here expounded, then, involve discarding
belief in the progressive jprinciple, and even maintaining, for not

* Every conceivable kin^ of diini]:^shin§ utility of income does not, of course,
necessitate progressive taxation if e^ual proportional sacrifice is to be secured.

“ I am taking^** satisfaction’' to refer to a purely subjective state, and “ utility ”
to refer to vhat is predicated of the thing producing it.

See no|e on p. 26.

No. 89. — VOL. XXIII

THE ECONOMIC JOUBNAL

[mabch

a few circumstances, ttiat the rate of taxation of the higher
income ought to be less than that of the smaller one? If it does,
we are certainly in a predicament, for most political philosophers,
I imagine, have a sort of instinctive belief that the progressive
principle is ^somehow right. But happily it does not, as I shall
hope to show. With an easy mind we may depy the truth of
the second premiss given above to justify progressive taxation
(namely, that income must be subject to diminishing utility),
because there are grophds for hgi^ing that, the first premiss (that
equal proportional sacrifices of utility should be aimed at) is
umrua,§^lso. Indeed, the real basis of taxation may be quite other
than a principle of distribution of utility-sacrifice.

Let us put the cru(jial question to ourselves in this way.
Should we think it fair to reduce the rate, of taxation pf large
incomes if, by a miracle, income above a certain amount became
subject to immensely increasing utility ? An t answer in the
^affirmative is entailed if we believe that taxation should aim at
equal proportional sacrifices of utility ; but it seems absurd- to
suggest collecting less money for the State from the rich and more
from the poor on the ground that the rich have become really
richer. This crude reductio ad absurdum may serve to make the
reader doubt whether the principle of equal proportional sacrifice
of utility can be sound.

But<3 if this principle is not sound, what isr the basis of
progressive taxation? It is,, in part at any rate, somewhat as
follows, I should suggest : that the wants satisfied by the earlier
increments to income are usually of more importance socially
than the wants' satisfied by later increments to income, whether
the satisfaction of the former causes more utility or .wdt. " In
speaking of the equity of taxatiqn, we are obvioilsly talking
ethics, and therefore the wants primarily dealt with must be
adjudged not according to the v»lue of their satisfaction m fact
(positive value), but according to the value of their satisfaction
in a moral scheme of consumption (normative vahie). ^The' poorer
a man is, the more likely is some confiscation of income to cause
him deprivation of comforts which add'to efficiency (meaning the
social value of his life) or even of necessities of efficiency; the
richer he is, the more likely is the curtailment of his consumption
to be effected at the expense of luxuries which add little or
nothing to efficiency, or may ?\en diminish it. So the right basics
has a certain reference to faculty. If it is put in terms of sacrifice,
it may be said that equal proportional sacrifice is^ the right thing to
aim at, only the sacrifice meant must not be one of utility (positive

1913] THE UTILITY OP INCOME AND Pl^OGBESSIVE TAXATION 35

value) as commonly understood^ If this kind of utility comes into
the reason for progressive taxation at all, it can only do so, accord-
ing to the opinions expressed here, in the event of its being
arguable that the man who enjoys more utility than his fellows has
social obligations much greater than theirs ; and, if it figures in this
way, the case far progressive taxation, so far a^* it depends u{)on
utility, would be strengthened rath^'than weakened by thfe con-
tentions in this paper as regards the connection between utility
and the magnitude of income. ^Fhat seeniff to me false doctrine,
as regards the basis o# progressivtf taxation, has no doubt been^
occasioned, in some degree, by a confusion between the ’'^sfgtlScy
and the importance of vvt.nl s, and by the assujnption that, when
wants are satisfied according to degrees of urgeiicy, their pro-
greBsive% sai i's"j,ction must result in continuously decreasing
accessions of utility d

S. J. Chapman

To make tlie argument doiinite, 1 have .selocti d for examination the utility-
suerilico tUeory wbjcb seems to me most piausiblc But the argument in general
liolds when any other utility-sacrifice theory is held, since, to deduce the necessity of
progressive taxation from any of them, diminishing utility of income must be
assumed, (See Edgeworth, Economic Journal, vol. VII, p. 560 ei seg.)

THE SOCIAL INT^;EEST IN SPECULATION ON THE
STOCK EXCHANGE.

market consists essentially of specialised
machinery by which goods are conveyed from one group of persons
to another ; properly 8j>eaking we should perhaps regard it as
constituted by the whole of the organisation by which the goodfs
are moved in their passage from one to the other group. Railway
companies, merchants, shopkee|X3rs reduce the co^t of conveyance
^‘of material goods; Banks, issue houses, brokers reduce the cost
of conveyance of capital ; in each case the market is essentially’^
organisation for the transport of goods between persons and its
social contribution is to be measured by the economies of transfjort
introduced by the agency of its specialised skilly and machinery.

The market for capital consists then of all the machinery
lying between those who save capital and those who usctit. But
the sense in which the term “capital “ is used needs some elucida-
tion, for evidently the monefy market does not deal in durable
goods, like bouses and machines, to which the term is usually and
properly applied. c

The act of saving is one of forgoing the enjoyment of
which may be commanded from society’s workshops ; ij isfSerefore
an act which liberates social, rescturces from the production of
these immediately consumable goods, and frees them for other
purposes. The product of the act^of saving, the commodity of the
money market, is therefore a control over that part ol social
resources which are thus freed, and it is this bontrol over free
resources, this “command over capitaU.* (in Dr. Marshall’s terms)
which is conveyed from one group to another, and which enables
the business man into whose hands it passes to adopt roundabout
processes, and set up the factories and machines which constitute
capital proper. ^ v

The machinery constituting the marked; for capital, in this
sense of free capital, consists of the organisation of the banks, the
Stock Exchange, trade credit, the brokers, solicitors, tinist com-
panies, and a great variety of financial institutions adapted to

MAR., 1913] SOCIAL INTEREST IN STOCK EXCHANGE SPECULATION 37

special needs.^ The essential function of each part is the con-
veyance of capital between i>eiBons, but the characteristics of the
one shade imperceptibly into those of the other in adaptation to
the varying characters of the ^^rroups they serve to connect, and
separation must be made on the ground of somewhat fortuitous
characteristics rather than by any true “carving at the joints.”^

If we sepat&te these parts of the market b> reference to the
nature of the security in which they deal, we may mark off fairly
clearly the organisation of issue houses, ^brokers, jobbers, &c.,
dealing in the homogeneous &»*ou])b of rJegotiable securities —
stocks and shares ; but this organisation is comi:)osed of two p^ts..
analytically distinct, which must be separated in order tvi isolate
the market with which '.his pa|>er is concerned.

The first part consi '.ts of issue houses, brokers, underwriters,
&c., wko. are concerned with new issues, and whose function,
quite clearly, hi^to convey free capital from the group who save
and owm it, the pure capitalist class, to the group who use it, the
pijre entrepreneur class. By its agency an enormous amount of*
capital Jhas been carried from one group to the other.

But the presence of this quantity of capital in the hands of
entrepreneurs implies tlui supply of certain services, such as
waiting and uncertainty-beai'ing ; that is to say, it implies a burden
of dis’dilities falling upon the capitalist class who have forgone
the use ef their resources ; and the second |)art of the market, the
Stock Exchange, consists of an organisation lying wdioll^ within
this group of capitalists, the functiou of which is to distribute this
burden among those who are whiling to bear it at the lowest price.
'Hius the device of splitting up securities into ordinary, preference,
d^ierred sharet, &c., concentrates Uncertainty (i.c., “Bisk”)
on certaTn cj asses of securities, and allows uncertainty to be borne
by those who, at any moment,* are jvilling to do so most cheaply ;
while ^8 the circumstances or tastes of the capitalist change from
tim^to time, the organisation enables him to transfer his burden
to others who are then more willing to undertake it.

There is thus a continuous process of shifting in accordance
with changes in the particular circumstances or outlook of the
individual capitalist, and the social service of the organisation
by which this distribution is effected between different persons
and different times is measured by the reduction in the real costs
of supplying the® quantify of capital which has been transferred
into the hands of the entrepreneur*class.

Bringing Jjogether these two parts of the market, we see that
they are* interdependent parts of an organisation whose social

THE ECONOMIC JOUBNiL

[mabch

function is that of conveying capital into the hands of those best
fitted to use it; of bringing together capital and business power,
thereby lowering the cost of production of business undertakings
and increasing the national dividend.

The speculator performs important seiwices in both these
naarkets ; in the former, for example, he acts in effect as an unpaid
underwriter, and may exercise an important influence, sometimes
for good, sometimes for evil, upon the direction in which canital
is supplied. We are, concerned here, however, only with his
services in the latter market, the Stock Exchange, considered as
^ftjj^j^nisation for the continuous redistribution among capitalists
of the^isutilities involved in the supply of capital outstanding in
the hands of entrepreneurs. We need to know', therefore, what
is the nature of those disutilities, what is the economy which he
effects, and finally whether the payment which he rec^ves for
his services is governed by the normal laws whicJi confine the
reward of the prodycer wuthin the value of his contribution to
" society. The result should indicate the social contribution of Jhe
speculato’r.

The supply price of capital is c*om)^x)site, and consists of three
payments corresponding to Ihe three costs or disutilities involved
in its supply.

Pure waiting is taken to mean the service of supplying capital
for periods terminable at wnll ; its pricc», is thr; net rate of interest.*

The bearing of Risk, or more properly^ t Tj-jcertainiv. needs no
description; it is a service which is general) y disagreeable, and
therefore commands a payment. The third element, the bearing
of Financial Insecurity, w^as discussed by the present writer in
article in The Economic Journal in September last;
only a brief description here. One of the important circumstances
of business is the condition that, owing to uncertainty as to the
future, a business man is constQfntly exposed* to the chance of
sudden demands being made upon him, and consequt ntivof sydden
contractions in the available resources at his disposal which may
seriously hamper his operations, and may even Result in a
bankruptcy, although his assets largely exceed his liabilities. If
a business man lends a temporary superfluity of capital on the
condition that it is repayable on demand, his position is much
the same as though he retained it in gold in his safe. If, however,
he supplies capital for longer periods, as*‘on debentures or against
a mortgage, his power to meet* emergencies* is thereby w^eakened,
and there is an increase in his Financial Insecurity, for bearing
which he naturally requires to be paid. The bearing of Insecurity

1913] SOCIAL IKTEB5ST IN STOCK EXCHANGE SPECULATION 39

is therefore a real cost in the supply of capital, and the practice of
the market shows it to be a service which commands a definite
price. Thus “overnight “•money is cheaper on the average than
the rate on three months bills, and the rate on three months bills
which are marketable is lower than the rate on equally secure
three month loons, which are not. Every increase in the market-
ability of a sewrity diminishes the Insecurity borne by the capi-
talist, for it makes his invested resources more available in the case
of emergency. The work of the Stock Exchange in inoieasing the
marketability of securities is therefore, Hi effect, the service of
reducing this element of cost in •the supply of capital ; its very
great imjx)rtance is iinme.li::.iely seen when ii is realised th in
the absence of this orgo aisa-tion probably only a small fraction of
the present supply of capital would be forthcoming for railways
&nd siijiilar radertakings which require the use of capital for long
periods of tirro.

It is usual iS) include among the costs of production of capital
the trouble involved in its administration*; but the economiei^
\^hich the market effects in the trouble of dealing in stocks and
shares* is already ^timated in terms of a reduction of financial
insecurity, and the other more important part of trouble involved
in watching investments is more properly considered as a part of
the cost of bearing uncertainty. In considering the social service
perforated by the market we may avoid separate consideration
of its work in* reducing trouble, just as, for other reasons,, we may
neglect the consideration of any effects it may have in reduciiig
the cost of pure w^aiting. We are therefore left4o deal with the
icosts of the two remaining elements, the bearing of Uncertainty
' apd Insecurity ; %nd w^e may pass directly to the more limited
proW&f of measuring the contribution of the speculator to the
organisation which reduces ttie amount of these tw’^o disutilities
by facilitating their rapid redistribution among the group of
capitalists m accordance with* the changing circumstances of its
* me*mBers ; thereby reducing the burden cast upon the capitalist
group by the transference of the quantity of capital lodged in the
hands of entrepreneurs, or in other wwds, lowering the cost of
production of capital.

The Service of the Speculator . — Commercial operations arise
from the profit , to be drawn from price differences of two kinds.
Differences of price between two points of space call into being
organisations for obtaining knowledge of them, and for the trans-
port of goods between the two places. Differences of price
between tWo points of time result in an organisation for forecast-

THB BOOUOMIC JOT}BNAL

[maboh

iag themt ancf for ‘'carrying ” goods bet wen the present and the
future. The two kinds of operation, the trading and the specula-
tive, are essentially similar; they are acts of transport effecting a
redistribution of goods, which tends to continue until the interval
between prices declines to an amount which just covers the cost
of the marginal transaction.

‘"It is therefore quite clear that the direct net social contribu-
tion of the railway company and the speculator must be measured
by the reduction effected in the cost of carrying goods between
persons separated in tiie one case by space and in the other by
time ; and that the product arising from this service of transport
conibiylo like that of any other producer, in a utility added to the
commodity dealt in ; in this case it is a utility of position which
is apparent in the form of an increased exchangeability of goods.

The costs of production of this utility, in the case^of thd
speculator, arise, first, from the condition that the carriage of
goods through time requires the use of capital, &nd therefore a
pharge for interest; and, secondly, from the condition that the
essential variability in value of these goods involves a charge f&r
the bearing of Uncertainty. The former element of cost ihay be
taken for granted : the latter indicates the essential service, and
leads directly to a consideration of the efficiency of the speculator
first in reducing Uncertainty by forecasting changes in value, and
secondly in bearing that residue which he is not able to elhninate.
It needs tto be shown that this service is performed Inore cheaply
by the speculator than by the public.

In order to tbring this reasoning nearer to actual business
conditions it is convenient to break off the argument at this pointy
and to trace the effect of the speculator’s work-in the Stock^^d
Produce Exchanges.

The distinction between the^ speculative and the non-speoula-
tive must be made rather between transactions than between
persons ; by a speculative transactidn is meant one which is con-
ducted by a person whose operation is influenced mainly %y
consideration of the future capital value of the security* (or other
goods) in which he is dealing.

In a produce exchange for, say, cotton, fluctuations in the
value of the commodity when regarded over long periods of time,
tend to cancel one another. But, although in the long run they
may inflict no direct money loss upcm the tnarket* the possibility
of their occurrence is always uncertainty to each holder of
cotton. The manufacturer who carries his own cotton may in the
long run have suffered no direct money loss, bvPt he* will have

1913] SOCIAL INTEREST IN STOCK EXCHANGE SPECULATION 41

been continuously subject to imperfectly foreseen changes in his
business situation : and he will ^usually be" willing to pay a price
for the removal of this evii by buying or selling a future, the
price of which will (normally) contain a payment to the speculator
for his service in carrying cotton through time. He desires
protection against such of these unforeseen changes as arise from
fluctuations in the value of cotton , and obtains :'t by shifting the
burden of Uncertainty to the speculative market. W:jre he not
to do so, the Uncertainty to which he would be exposed would
require him to maintain a reserv'^ of resoui ces, the loss of interest
on which would be a measure ot *tbe inj.^ry which Uncertainty
inflicted upon him. ^

The holder of a security, on the other hand, is necessarily a
bearer of Uncertainly. He- cannot separate the Uncertainty from
his secui^ty ar 1 effect a simple transfer to the speculator, though
this result nuy be attained in pari by other methods. The
security holder dosires prot (action from imperfectly foreseen events
which arise from causes external to the market— from those cir-
cumstances of his business situation which may cause financial
emergency. The imperfect availability of his invested resources
limits his power to meet enjergencies, and therefore carries with it
Financial Insecurity. He will therefore be willing to pay a jobber
for its removal, and the amount of the jobber’s “turn “ will depend
•upon thttcost of his speculative service, that is, mainly upon the
Uncertainty which he bears during the interval which»elapses
before he can undo his transaction. • It is not, of course, intended
to imply that the amount of the jobber’s turn (plus the broker’s
fte) measures the social cost of transferring a security from one
♦nvef^JjQj to another#; this amount will generally be a payment for
only a*pE1:t,of the process, the remainder being effected by the
other speculators in the market. ^

Tljp work of the jobber appears in the Stock Exchange as an
increased facility for marketing*; that of the dealer in the produce
fnatkef as a bearing of Uncertainty, but although its aspect varies,
the same speculative operation underlies both, and its effects are
quite symmetrical. The pjroduce broker, by taking over from the
manufacturer a burden of Uncertainty, enables him to invest his
resources more closely; his costs of production fall, and the gain
is shifted to the consumer in a lower price of his product. The
jobber in the saime way removes Insecurity from the owner of
securities ; the supply price of capital is lowered, and the cost of
production of business undertakings is reduced. The speculative
service, fandamefitally similar in the two cases, both in its nature

THE ECONOMIC JOURNAL

[march

and in its cost of production, effects a cheapening in the process
of transport. The saving is shifted to the cotton manufacturer
in the form of a reduction in the costs at which he can meet the
Uncertainty falling upon him ; it is shifted to the security holder
in the form of a lower cost of marketing, that is, in the reduction
of the burden of the Financial Insecurity to which he is exposed.
The economy which the speculator can effect J.n the costs of
transport through time depends, first, upon his ability to hear the
Uncertainty of which he relieves others ; secondly, u(;)on the extent
to which he can redupe its amount by his skill in forecasting the
future. ‘

the conditions obtaining in these highly developed
markets, where the speculator's direct service is a competitively
produced utility, in effect sold on the market to competent buyers,
it is a necessary inference that the gain to the purchaser exceods
the cost to the producer, and accordingly that the supply of the
service results in a net social advantage. This conclusion is
reinforced by considerations derived from an analysis of the
speculator’s payment in such conditions. *

The Payment of the Speculator . — li is said that a Tlolhschild
laid the foundation of his fortune b^ a successful speculative
transaction ; he obtained the earliest news of the victory of
Waterloo and reaped an enormous profit by a skilful operation in
Consols. His gain may have been a million pounds and Jiis costs*
£1Q,0()(5;; his service' to society consisled in tempcfrarily making
Consols rather more marketable, and in raising their price a day
or perhaps a few hours earlier i.han would otherwise have been
the case. It would have been to his advantage to have invested^,
if necessary, perhaps £800,000 in the organisation of intelligence^
yet the advantage to the community would certainly hav^ Been no
greater ; £1 ,000,000 would have been paid to obtain a trifling
improvement in the market. It is evident thaj; the principle of
payment here is quite different from that which normally obtains.
The speculator’s profit is not drawm from the value he ciontHbutes
to society ; it is limited only by a difference of price multiplied by
the volume of his transactions. The social advantage of his
operation is not measured by this difference ; it consists of the
additional utility added to the product by the speculative trans-
action, an amount unrelated to the source of individual gain.

The condition that the gain arises frewn a difference between
two prices does not, how^ever, ^n itself offer any explanation of
the peculiarity, for the profit of a manufacturer or retailer is
derived from a similar source ; some further inquky i^ necessary.

1913] SOCIAL INTEREST IN STOCK EXCHANGE SPECULATION 43

When the manufacturer of a freely produced commodity
employs skilled chemists in research, the salaries he pays are
similar to the expenditure* of the speculator in perfecting his
judgment ; each will press his investment in this direction up to
that point beyond which he would expect no further gain. From
his chemists the manufacturer will get an output of ideas which
increase his productive efficiency ; they swell hi« profits, but thef
cannot, even when monopolised, add to his gains an amount
greater than the benefit they confer upon society. Indeed, it will
generally happen that the individual (maiginal) gain will be less
than that of the community: in far as this is so» investments
in knowledge tend to b('. (. aiaied less far than is desirabl#. The
extent to which the proJiicer of new ideas should shate in the
social advantage of Ins improvement cannot be precisely stated
in general le ms, buf* the existence of the Patent Acts is good
evidence thaf ^he individual profit tends in these cases to be too
small rathoT th?^&i too great.

Similarly with the vsp^culator ; his agency'will supply him with^
knowledge, the jxissession of which reduces his costs of production
by lessening the Uncertainty which he takes over. So far the
two cases are precisely similar ; the investment of resources in
intelligence yields differential advantages of production ; if the
knowledge is monopolised the individual profit is still confined
' within the value of the net gain in social efficiency ; and if con-
ditions of true competition obtain, the advantage is rapidly ‘shifted
to the public in a lower (or more fjtvourable) price of the product.

But there is this difference. The inte11iger>ce acquired by
%lie speculator has the effect not only of reducing his costs, but
'of injuring the machinery which regulates the reward of the factors
of prodiftitjon. Society protects itself against exploitation, not
by directly allotting similar •payments to similar costs, but by
proyj|3i^^ fGr thg*- free exchange of the products of those costs.
In-order that the community khall give no more than it receives
*it is essential that buyer and seller should have equal knowledge
of the commodity in which they deal ; any variation from this
condition destroys the efficiency of the method by which reward
is regulated. For this reason, therefore, the superior knowledge
of the speculator enables him to transfer wealth from others to
himself ; and this advantage can be destroyed only by the most
complete competition which will reduce the price of his services
to their costs of production. The same condition is essential in a
trading operation ; a single ^ arbitrageur operating between two
markets, aTthowgh dealing with willing buyers and sellers, may

THE ECONOMIC JOURNAL

[march

draw enormous gains from his greater knowledge of prices ; but
a single competitor can put buyefs and sellers on an equality in
knowledge with the arbitrageur, and reduce the profits of both
to a normal payment for the convemence which they afford to
the public.

In the absence of such competition the private gain of the
s|)eculator exceeds his social contribution, and h© tends to press
the production of intelligence beyond that margin at which its
social value is equal to its cost, up to that point, at which his
individual profit is maximised.

The point of view may be Slightly shifted and the speculative
operation regarded as a whole. It consists essentially of a
purchase at one jxiint of time and a sale at another ; the redistri-
bution of commodity effecting a net gain of utility. Any
cheapening of the process which produces this utility is a gain of
social efficiency, and enriches society (regarded as a group con-
taining the speculator) by the excess of this utility over its cost.
cBut the circumstance that this reduction of cost is accompanied
by an unduly large transfer of wealth to the speculator tends to
make him press the application of resources in this direction
beyond the point socially desirable, and so to bring about a net
social waste.

The provisional results may now be summarised. The direct
service of the speculator lie.'? in reducing the covst at whkh goods
are conveyed between persons separated by time, 'this operation
is a process of production which, like any other, adds utility to a
saleable product; a utility (.f position which facilitates exchange,
and in the case of stocks and shares reduces Financial Insecurity,
thereby lowering the cost of production of capital. The expenses'
of this process arise from the costs of supplying skilled judgment
of the future, and the service- of bearing Uncertainty. The invest-
ment of resources in the production of intelligence tends Jo be
pushed too far, for the reason that the possession of superior
knowledge allows the speculator to transfer wealth from others
to himself to an extent which has no relation to the value of his
service. Hence arises a divergence between social and individual
interest which can be removed only by the presence of competition
sufficiently free to eliminate the ignorance of those with whom the
speculator deals, and to reduce his profit to the cost of production
of his services. In speculative opcrations®it is thi^refore only the
force of free competition which gives society -that natural protec-
tion which, in other cases, whether under monopoly or free
competition, confines the profit of the individual \/ithin the value
of his contribution to the community. ,

1918] SOCIAL INTEREST IN STOCK EXC.JANGE SPECULATION 46

The limited nature of this provisional conclusion soon becomes
apparent, however, when we turn to the actual work of the
speculator on the Stock Exchange, whi^h may conveniently be
considered by looking at the general conditions governing his
costs of production. The first element is, the bearing of Uncer-
tainty. The real cost of supplying this service is probabl/
lessened by the speculator's temperament, his power of doing so
must certainly depend very closely upon his facilities for obtaining
control over capital ; for the exj>oBare of to a given risk of loss
is an evil which obviously diminishes with every increase in the
quantity of resources dis}>o>c.ble, and in the variety of their dis-
tribution. Both the wo*» ah of the iobber and other spe.'ulators,
and the service of the l^anks in extending their control over
rSsources, are tliereiore of the. first importance in reducing the
costs of the ma**ket.

The second Element consists of the reduction of fTucertainty.
As knowledge of the future extends, Uncertainty declines inde-
fiifitely ; at its vanishing point the speculator’s service lies entirely
in the production of intelligence. Probably the skill and experi-
ence of the jobber enable^ him to effect a considerable economy
in this way, but, passing outwards to the public, knowledge and
judgment, though corrected to some extent by the broker’s advice,
•decline jn value and rapidly reach a point where they are
negligible relative to ignorance. In these outlying reg4)n8 the
social value of the speculator becomes indeterminate. He in-
creases the marketability of securities, and therefore reduces
Insecurity, but while he bears Uncertainty for a j>ayinent which
•is likely in general^to be negative, he increases the amount to be
borne by the market by the incalculable fluctuations of price which
result from his fitful operations. This ambiguity in the social
effects of the unskilled speculator shows immediately that the
simple statement of his direct product does not exhaust the
Sccount of his influence upon the market. His primary service
consists of. a commercial operation between two prices separated
by time and results directly and necessarily in a diminution of
Financial Insecurity. The efliciont performance of this act requires
him to reduce the Uncertainty falling upon himself, and this he
does merely by obtaining a superior knowledge of the future
course of pricey But twhile his operations will result in prices
tending to move towards those which he anticipates, it is by no
means necessary either that they should be steadier or that they
should i^ov 6 towards prices more nearly approximating to invest-
ment values. The gathering of his profits is independent of his
influence both upon the variability and the accuracy of price.

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[march

Every speculative act influences ^price, but the speculative gain
may be independent of the social results of that price movement ;
the control of price in the interests of the community is not a
service deposited with the speculator by economic circumstances
which make his profits dependent uix)n its performance. The
social value of his influence on prices may be positive or negative ;
it is purely fortuitous, and depends, not upon the self-interest of
any business group, but upon the particular environment in which
the speculator operates.

This circumstance suggests at once that in attempting to
estimate the social importance of a process of production it is
insufficient to consider only its direct product ; account must be
taken also of any other social results involved in its operation.

The profit of producers in general is limited by the yalue of
the direct exchangeable product which alone forms the incentive
to their operations ; the social gain is given by thfe algebraic sum
rof the value of both 'direct and indirect results. The services of
a railway involve an indirect effect, a surreptitious educative
influence u^xin the community which, using Professor Pigou’s
terms, make the social, greater than the individual, net product;
in such a process as banking tliese indirect results arc j)erhaps
negligible ; in the building trade the social gain is less than that
of the producers by the evil eltects uj)on labour of its, discon-
tinuous employment, evils wliich do not fall wholly upon builders,
but are distributed over society in general. It is evident, there-
fore, that the indirect effects of various branches of production
pass from a maximum positive value through zero, where indi-
vidual and social net product are equal , ta a large negative »
quantity ; the series is distributed between two sucii extremes as
the output of new ideas and the process of production of a pick-
pocket.

The provisional conclusion that in the presence of free com-
petition the direct service of the speculator must be advantageous
to society, needs therefore to be supplemented by h consideration,
first, as to the extent to which free competition does, in fact,
obtain ; and, secoi^ily, by an estimate of the importance of the
indirect effects of 8'|)eculator’s operations ; and these latter effects
are the more difficult to estimate for the reason that their import-
ance cannot be examined tiuoretically by any (^-onsideration of
the marginal equilibrium of cost and utility in conditions of free
exchange, but are questions of fact which can be answered only
from direct observation. ^

One of the most prominent indirect effects of speculation is

1913] SOOUL TNTEBEST IN STOCK EXtflANOB SPECULATION 47

the instability which its practice Jlntroduces into living ; it destroys
that relation between “conduct and consequence” which is the
basis of rational action. No attempt can be made to measure
these effects ; even if it were posoible, the moral evil which they
involve would remain largely a matter of opinion. It is perhaps
reasonable to consider them set off by the pleasuies of speculation,"*
an influence scarcely less measurable, but evidentl}^ of great
importance in lowering the costs of the market.

We may therefore neglect ^hese indefinite effects and pass
to consider tlie nature and importance of the speculator's influence '
upon the price of securities.

It happens that the co„iditii)ns in many markets — in particular
where, as in the market for wheat, the voliUije of coin?iK)dity is
vd)ry great — pr vent the speculator froin profiting by any attempt
to controf futur'' prices, and limit his gains to those ootained upon
operations whicTi, if intelligently directed, have the effect of
smoothing price changes due to the natural cotirse of events. But ,
th^ opinion thiit the total effects of the speculator’s operations in
sucli conditions show a balance of advantage to society cannoti be
extended to the Stock Exchange without taking account of the
very considerable differences between the two markets.

Securities differ from produce in several important respects.
4^irst, a group of stocks and shares is not homogeneous, like inter-
changeable grades of wheat ; the quantity of any issue i^ often
comparatively small, a condition which gives greater scope for
manipulation, and, by increasing the risks of •short selling,
diminishes its corrective influence. Secondly, while the value of
©ach is subject to 'variations arising from both general and par-
•ticular causes, in the case of the latter not only intelligence, but
also control, is in a great measure lodged with interested parties.
Pinallj^, the inconje from securities is often far less definite and
certain than that from produce* they are held in vast quantities
by a flu'blic very imperfectly informed, and therefore highly
subqeptihle to suggestion ; that is to say, the public demand curve
for securities is not independent of price, but may be influenced
by its fluctuations.

The high importance of establishing prices conforming to a
normal level is derived from the function of price in regulating
production and consumption ; that is, in effecting a more perfect
adaptation of supply and in facilitating that distribution ot the
output which maximises its utility. The adjustment of resources
in produc^ioil is governed not by momentary prices but rather by
an average nrice over a period whicji varies with the conditions

THE ECONOMIC JOUENAL

[maech

of production of each commodity, and this effective period is likely
to be much shorter in the case of securities than in produce. Mr.
Emery maintains that in the wheat market improved prices may
have some good influence on the regulation of supply ; but if we
compare the effect on the output of wheat of a few months of
’"high wheat prices with the influence of corrpponding period
of inflated prices upon the production of oil shares, it becomes
evident that the influence of speculation is likely to be far greater
in the latter than in ^ the former case. Moreover, not only is the
magnitude of the speculative effect likely to be greater in securities
than produce, but its importance will also be greater. Company
directors place a high value upon their “credit/’ that is, upon
their power to increase their issues in cases of great opportunity or
emergency, and this power being bound up with the relatke
stability of the market quotation for its shares, the de'nand for
stability is an urgent one. <

Corresponding tg the effect of improved prices in controlling
the consumption of wheat and increasing its utility to the con-
sumer is the effgct of a closer approximation to investment values
in increasing the value of securities. This closer approximation
cannot, of course, increase the money' yield of stocks and shares,
but by narrowing the limits within which capital values fluctuate,
and by giving greater knowledge of their futui'e yield, it increaseij
their utility by reducing the Uncertainty of the investor.

It IS not, of course, possible to arrive at any very definite
opinion from general reasoning of this kind, but it appears fairly
clear that on the Stock Exchange, as contrasted with the j)rodu^‘^
market, accurate prices are far more important in regulating
production, and not less important in the distribution of supply.

In passing to consider the general conditions whi6h determine
the actual influence exercised by the speculator on market values,
the differences between the two markets are seen to become more
prominent. . ^ «

It has already been stated that the public interest in speculative
transact? >ns requires that they should be based on a Imowledge
of what future prices should be, while the speculator is concerned
only that they should be based on a knowledge of what future
prices actually will obtain. The degree of Coincidence between
these twq interests depend mainly upon t^e volume of commodity
present in the speculative mai^ket and susceptibility of the public
to the suggestion of changing prices.

When the volume of commodity is as vast as that^in the wheat
market, th§ possibility of manipulation is reduced to a rninimum ;

1913] SOCIAL INTEREST IN STOCK EXCHANGE SPEOTTLATION 49

a corner in wheat is, according to Mr. Emery, a thing of the past.
But there is a further advantage in mere quantity ; it enables the
bears to reduce the bale nee of optimism in the market, thereby
tempering t.|ie rapidity of a decline in values much as the action
of bulls anticipates a rise.

It is evident that in this respect the conditions on the Stock”
Exchange ^ire in general far less favourable to the establishment
of improved prices. Sir Eobert Oiffen draws attention to the very
great importance of the presence of a volume of capital

speculatively directed, which unwen readily from one sound
security to another, rnaintair'ing iheir values against fluctuations
in opinion unjustified by n' tnal conditions. No doubt this service
is of very great value, but it needs to be balanced against the
speculative influence on the less reimtable securities. Looking at
the recenrt oil and rubber booms, typical of many oilers, it seems
doubtful whether the sf>ecnlative piice has on the balance^ any
positive value in regulating the price of such securities. The
8i>%3iiIator’s influence in distorting price need not be due to
unaided manipulation; indeed, it is said by Mr. Hartley Withers
that deliberate manipulation by powerful interests is of little
importance in the London Inarket, and this opinion is confirmed
by that of business^men. The evil appears to arise to a far more
important extent from the continuous qualitative changes in many
securities* and* the consequent extreme difficulty in estimating
their value. As a result of this apy change of price originated
l>erhaps by professional speculators, re-acts upon public opinion
a^pd produces an unreasoning speculative activity which results
not in correcting, but actually in reinforcing, that change.

* While general reasoning goes to show that speculative opera-
tions are far 'less likely to result in improved prices on the Stock
Exchange than in the great produee*markets, it cannot yield any
very d^ifinite results. If, however, one contrasts the hypothetical
ruarket formed by investors only with the actual Stock Exchange
containing speculators of every shade of skill and experience,
and if he reflects further that the trust companies alone direct the
speculative investment of some seventy millions of pounds with
a judgment far superior to that attainable by the investing public,
it seems impossible to 'doubt that while in particular cases prices
may be distorted, yet t|jfe influence upon price of the body of
speculators, takei? as a whole, yields a considerable net advantage
to society. The beneficial effect on price may be less than in the
great produce markets, but there will still be a balance of good.

Eealistic inquiry is equally necessary in dealing with the
No. 89.— /oL. XXIII.

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[MAECH

question of the efficiency of competition in beating down the
speculator’s profits to a normal lef el ; ^but some general observa-
tions ^ay be made. The essential condition for effective com-
petition in speculative operations is that of equal access to the
sources of intelligence by |>ersons of similar ability. Superior
itfeitural ability in a speculator is similar in its social effects to
the possession of monopolised information which it has cost
nothing to produce ; its utilisation increases the aggregate wealth
of the community, but gives opportunity to its possessor to spoil
the public. It has already bean argued that while the changing
values of produce depend on general influences, intelligence of
which is unrestricted, the values of securities vary also from par-
ticular causes of which knowledge and control are in some measures
confined to a limited number of interested parties. This imperfect
access to the sources of information, especially notable in ^he case
of joint stock companies, must greatly limit the efficiency of enm-
^petition, thereby allowing the individual, to exceed the social, net
product. No doubt monopolised information cannot long be
withheld from a vigilant market ; it is published by the very
operations in which it becomes effective, but it may b(. concealed
from the general public for a sufficient time to allow of abnormal
gains to its possessors. Without enumerating^ the parties — the
company director, the auditor, and a host of otljers~-in a position ,
of differential advantage, it may perhaps be token as established
that in certain groups of securities competition acts very imjx^r-
fectly in reducing the gain to be derwed from exclusive know-
ledge to the value of its social productivity. To the extent
therefore, that the speculator is in possession of superior ability or
mono|X)lised information, his social justification is weakened, and
hi^storical prejudice against his 9 perations is correspondingly
vindicated. *

When one turns to consider unorganised markets like th6se in
land, it is easy to see that very imperfect competition may of-lcK
result in the condition that the direct service of the syieculator is
enormously Overpaid, and when there is added to this the con-
sideration that the indirect effect of hi^ Operations is quite likely
to be socially injurious, it becomes evident that the total effect
of his activities may involve a very considerable loss to the
community. ^

Summary , — The argument directed to determine the social
service of the speculatoi ,on the Stock Exchange is somewhat
elaborate and at present incomplete. It has tended to show that
the a priori justification which attaches to the direct service of pro-

1913] SOOIAI. INTEREST IN STOCK ET ?HANGE‘'sPEnTJLATipj^ 51

duction processes in general, for .the reason that itst payment is
derived from, and confined witlSn, the social value of its out-put,
holds for that of the si eculator, but only in thf^ presence of com-
petition sufficiently free to elicunate from his superior intelligence,
any value other than that derived from its social productivity . In
fact, however, this competition being im})erfect^. opportunity is
given for abnormal profits, and cons^ qucurly the investment of
resources in speculative operations tends to be pressed beyond
that margin adjustment at which it is socially desirable.

The extent of this compefirion, is a question of fact which
can be answered only by ji* txarnination of each rnarkot, or,
indeed, of each set of tr; -nsactions. The presence of completely
free competition is a guarantee that resources aie invested in the
rq^uction ard I'^caring of Uncertainty up to that margin which is
socially iesirahle, and thereiore that the direct s^rvicje of the
speculator >ielcl%a net social gam. But as comix?tition declines
in efficiency the existence of this gain becomes less and less
pr<^ablc, and m such unorganised markets as those in land it is
likely that there is a very considerable misapplication of resources,
and therefore a large social w^aste. The indirect effects of the
speculator’s operations being unrelated to any social payment
need to be separately estimated. It was argued that while price
regulation was of greater importance on the Stock Exchange than
in the produce* markets, speculative influence was less likely to
establish accurate prices in the former than in the latter rnarket,
and that no argument as to the total effects of speculation could
hg extended from one to the other. The question whether or npt
speculative regulation of price shows a net gain to society is again
^ question of fact td be separately determined for each market ;
it turns upon ’such conditions as the volume of commodity and the
^.ent to which knowledge of the fukiire is possible.

In the particuli^ case of the ^tock Exchange it appears to be
highly likely that competition is sufficiently free to ensure a con-
siderable-net social gain from the direct service of the speculator,
and while no opinion can be expressed as to the importance of
the pleasures and the moral evils of speculation, it appears to l)e
pilmost certain that the remaining indirect effect — that on price—
yields a gain to the community, and, no payment being made for
this gain, it forms a ngt addition to the contribution of the
speculator to the •efficiency of the market.

Finally these results may be translated into the terms
employed in beginning of this paper.

The in<!hntive^to the speculator is derived from the profit to

p. 2

52 THE ECONOMIC JOUBNAL [MAKCH, 1918

be drawn from the transport, of goods between two prices
separated by an interval of time ;*liiR .direct product is therefore
the increased utility which this act adds to the goods carried.
This utility appears on the Stock Exchange as an increased
exchangea^bility of securities which facilitates the continuous re-
distribution of the disutilities involved in the supply of capital,
thereby reducing the Financial Insecurity attaching to holders of
stocks and shares.

•In addition to this, primary service his operations do, in fact,
cause prices to approximate more closely to investment values ;
they therefore yield a secondary indirect product which appears as
a reduction in the amount of Uncertainty falling upon investors in
general .

Together these two services reduce the deterrents to the supply
of capital, lower its supply price, and reduce the cost of pit^dnction
of business undertakings.

F. Lavington

THE CENSUS OF PEODUCTl(.)N AND THE
NATIONAL DIVIDEND.

•

The Report of tbe First (%>,dsus of J rorliiction of the United
Kingdom (1907)^ allorcl^ nn opix»rtunity of considering the
statistics of production and of income with reference to each
other, and with reierence to tiie economic com^eptions of produc-
J;ion, distrihutioii, value, and income.

In >he General Report by Mr. A. W. Flux, which precedes
the detailed Iwbles, we find net only a desciiptive summary of
the new statistical r(‘sultc obtained, but, also an attempt bj
means of sueeping and bold estimates to obtain a complete
valuation of all goods and se^’vices jKoduced or rendered in the
United Kingdom, and a coni[)arison of this total with current
estimates of income. In* the following summary table, which is
re-arranged from the very involved analysis in the report, the
only values that were obtained directly by statistical inquiry are
those of net tiutputs, customs and excise, and excess of imports;
the rest are estimated from rough and imperfect data. The
merchanting and carriage of goods from the jx)rts and (in various
stages of manufacture) from factory to factory is estimated as
costing from 10 to 15 per cent, of the value of imported materials ;
and tbe transporf of goods from the ports or factories to the
retailers appears to be taken as about 'J5 per cent, of their value,
jvhile 35 per cent, more is added for retailers’ profits and ex-
jienSes. From oomparisou w^i^h the })o)>ulation census of 1901 , it
supposed that about one million workers employed in small
workshops or on their own account were omitted from the census,
and it is suggested that their net product averages about £50 per
person per annum. Ther increase of investments abroad is from
Sir G. Paish’s estimate read to the Royal Statistical Society.
The cost of maintenance of capital is based on a rough estimate
of the value of buildijigs and plant combined with a sketchy
inquiry as to tHfe percentage to be allowed. The remaining item,
as to services not productive industrially, is discussed belbw.
Though th^ estimates have so slight an apparent basis, it seems

THE ECONOMIC JOURNAL

[march

probable that a good deal of care has been spent in considering
them, and wide margins of error (expressed as ± in the following
table) are assigned in the report, so that it is believed confidently
by the compilers that “gross inaccuracy is excluded.**

Table I,

Net output of industries and

mining

Certain raw materials pro-
duced and used at home
Net output of agriculture , ..
Net output of fisiiorios

Result of direct inquiry ...
Estimated omissions
Duties on home goods . .
ISIorchauting and carriage
before completion
Merchanting and carriage of

exports to ports

Merchanting and carriage and
retailers' oxpeu.ses : —

of home goods
of imports ...
Occupation of houses, f)er.

Ronal services, &c.

Total of estimates and duties

690.000. 000

18,000.000

180.000. 000

i2,ooq.ooo

50.000. 000

48.000. 000

35,000,000 ± 8,000,000

45. 000. 000± 10,000,000

365.000. 000 ± 50, 000,000

127.000. 000±17,000,()00

375,000,000+ 25,000,000

900,000,000

1 ,046,000,000+ 110, 000, W)

Value of net output of gooda
and services vroduced or
rendered in the United

Kingdom

Value at port of imports loss

value of exports... 145.fKX),000

Duties on imports ... .. 15,000,«XX)

Increase in value of invest-
ments abroad 100, Oi)^), 000

Value of goods and services
available for consum.ption
or salving by tlw pciiple
of the United Kingdom ..

Less cost of maiiitenanct; of
homo capital

, N^t income of the United
Kingdom

1, 945.000, 000± 110,000,000

260,000,000

2, 206,000,000 ± iio,ooo,oqp

176,000.000 + 5,000,000*
.62,030,000,000+115,000,000 ^

The total thiib obtained on* the produettve side nfay be
compared with total income as hitherto measured.

Table II

1907, Estimated income above income tax limit

,, wages

,, inlerniediate income

880,000,000

740.000. 000

325.000. 000

Total income ... .. £1,945,000.000

^ Of course the vai ious errors may tend to balanc^e one anoij^ber, and the probable
error of the sum is less than the total -'•i the probable errors of the parts ; but it
hardly seems worth wiiile to apply the theory of probability to such rough estimates,
especially as no error is assigned to omissions or to investments. The total given
in the report, where the items are grouped differently, in £i, 9^ 8,000,000 to
£2,168,000,000.

1913] CENSUS OP PEODUCTION AND NATIONAL DIVIDEND

In this table Income (above d6160) and Wages are estimated
on the method used in The Economic Joubnal, 1904; p. 459,
brought up to date ; while Intermediate Income, that received
as small salaries or profits, or small pensioi^, interests, &c., is
estimated from the Eeport^ on Incomes to the British Associa-
tion, printed In the Statistical Journal, December, 1910, modified
for application to 1907. If we may suppose that the various
statements ir Table I. wf re not intiuenced by knowledge of
aggregate income as generally estimated, the agreement is very
remarkable, for no one can hope get sucli a total correct within
5 per cent. It certainly apj>earfi that ** gross inaccuracy is ex-
cluded*' so far as the lOial is concerned, if we may regard an
error of 5 per cent, jus venial.

The total inay be ( xhibiW in another form : —

Ti®LE III.

Gross outi)Ut agriculture, mining,
and industry, including raw mate-
rial, home or imported, and ox- £

eluding dn plica cion 1,360,000,000

Carriage, morchanting and retailing

connected with home goods ... 442,000,000

Duties on homo goods 48,000,000

Value of goods produced finished at
}iome when delivered to customer

or on ship ... * 1,850,000,000

orts ready for consumption ... 220,000,000

Duties (VI, transport and retailing of,

such import 140,000,000

360,000,000

Total for consumption or export 2,210,000,000

Subtract exports 465,(JOO,000

Total goods for home consumption or saving.,, £ 1,745, 000, 000 ±80,000,000®

•

Net output, as used in Table T., “expresses completely and
without reduplication the tdtai [jmoimt by which the value (at
*^woEks) of the products of . . . the group, taken as a whole, ex-
^^ceeded the cost (at works)* of the materials purchased from
outside.” Gross output in Table III. includes the value of raw
materials*, and of goods imported and manufactured or finished
at home ; but goods parsing through more than one factory are
only counted once. The value of material goods ready for use was
then £1,745,000,000.

,Tt was found possible to separate capital goods, “such as, by

^ Before this report (September, 1910) intermediate income had been estimatied
by me at £100,000,000 loss.

® Then the former total, £2,030,000,000, is thus obtained : — subtract £176,000,000
as above also £16,000,000 imports for maintenance of capital or stock, add
£100,000,000 ijj^vosted abroad, and £376,000,000 houses, services, &o.

THE ECONOMIC JOUENAL

[maech

their nature, must be employed in making or repairing machinery,
plant, or buildings,” from consumption goods “such as are
adapted for the personal use of consumers ” both in the Census
of Production and in the Imports. The value of capital goods so
found, with an estimate for transport, is added to the (net) value
^of new buildings and other works of construction, maintenance or
repair, as shown in the Census, and the total *^£365 ,000,000 is
obtained. Of this about one-half is allotted to the maintenance of
capital values in their condition, and the other half remains for
re-investment. A further rj^lativcly small sum of imports,
£*65,000,000, is regarded as maintaining or increasing the value
of personal goods (furniture, jewellery, (!tc.), say £15,000,000 for
maintenance and .1*50,000,000 for increase.

We jiiay then conijule the following tables : —

Table *^IV.

Material goods for personal consumption

Capital goods, for maintenance of plant, &c.

,, ,, ,, ,, consumer’s stock

„ ,, ,, investment

Increase of consumers’ stock

1,326,000,000

176.000. 000
16,000,000

180.000. 000
60,000.000

Total as in Table III. .

1,746,000,000

and finally,

T\ble y.

Personal oonsumpti on — M aterial gooiis

,, ,, Services and iicust h

Material and immaterial gcjds usdl

Additions to capital and stock at. lioipc
,, investments abroad . .
Savings

1.325, 000, fKX)
Oj 5,000,000

230, 000 (K)0
100, 000, (‘>00

i,7A0,:y)0,000

330,000,000 J

Total income 2,030,000,0(X)

The tables now given arise directly from the estimates in
Mr. Flux’s report, with alterations in arrangement and wording.
It is not proposed lo criticise here ‘the individual figures. What-
ever alteration might be made in detail if fuller informntioh were
available, it is not likely that the general relations of the parts
would be much affected.

“Everything that is jiroduced in the course of a year, every
service rendered, every fresh utility brought about, is a part of
the national income. We must be careful not to count the same
thing twice.” Very great care has been^taken ip the (Census of

^ Cf Professor Pigou, Wealth and Welfare ^ p. 364. “ . . . . Mr. Bowley’s

estimate, that one-sixth or one-seventh of the national dividend is converted into
capital annually.’’ For read giLcsa. I cannot find now wheraj^ublished it.

2 Marshall, Principles. ^

1913] CENSUS OF PRODUCTION AND NATIONAL DIVIDEND

Production not to duplicate entries. The governing method was to
reckon the net output of unit, b3' subtracting the value of all
things delivered to the unit from that of all things delivered by it.
In the case of industry, allowa’^ce is finally made for the mainten-
ance of capital ; in agriculture it had to be assumed that the condi-
tion of the soil ^was on the whole the same at the end as at the^
beginning. In the case of mines and quarries, no allowance is
made for depletion of value ; royalties are thus treated as income.
In those cases such as the postal service, .shipbuilding in dock-
yards, and other undertakings 1 y the central or local governments,
the product is valued, in one category or another, at the net cost
of production ; thus, if profits are made they are nowhere included
as income, and, if there is no question of profits, it is assumed
tjiat there is no excess of value of the finished product over the
cost. Thus o substaiitial part of the national income is ignored.

No serious Hbttempt is made, or can be made, to separate goods
from services. In Table I. we pass from the net output of^
material goods to a composite item including transport and
merchants’ services, and then to dirked services of persons and
direct services of capital, such as house accommodation. We
are left with the familftir difficulties that furniture provides
satisfaction of the same nature as houses, and that there is no
line that separates paid from unpaid domestic services. In any
case, tHe totail value of production, like the total income, is a
matter of arbitrary delimitation. .

Some people attach im])ortance to the aggregate of material
goods ready for consumption that are available for a nation. They
will find it very difficult to obtain any estimate from the report,
even if they can filime a definition. The material goods for per-
sonal consumption of Table f-tl,325,()0(),000) arc called in the
^port “ goods and services consumed or exchanged for services by
classes engaged ia production jjnd distribution,” and are intended
U4..be reckoned at the prices paid by the consumer as they reach
his hands. The next item, abbreviated into “services and houses,”
.^375,OOO,O0O (“goods consumed or exchanged for services by
classes engaged in supplying services” in the Report), is com-
posed of several roughly estimated items : (i) Income from owner-
ship of buildings not used for production, assumed to be the value
of the services rendered; (ii) railway and tramway revenue from
passenger service, less value of coal consumed and destruction of
capital goods, and less receipts from commercial travellers; this
is assiune^o equal the value of services rendered to non-business
travellers ; ii^-ftivolves the distinction between travelling on

THE ECONOMIC JOUENAL

[mabch

business and of necessity or on pleasure, and assumes that the
value of a railway ticket is equal to J;he price paid for it ; (hi) the
part of postal 'service which is not for business ; (iv) the services
of domestic servants, taken as equal in value to the aggregate of
wages and the value of board and lodging ; (v) the services of the
central and local government, so far as not already reckoned in
production, whether as duties or as goods produced by the govern-
ments ; (vi) the services of the ])rofessional and artistic classes
and of the business, groups not already reckoned in (v) or in the
Census ; (vii) some other pewsoiis rendering direct service.

Two points arise out of this category : first, that there is no
universal means of valuing services rendered in production apart
from services renden‘d directly ; second , that such services can
only be valued by estimating the income of those performing th^,m,
vjhile material goods and a great part of transport services can
be valued by their selling price in the open market. The distinc-
tion, if there be one, between the value on the productive side
and the income of occupied persons on the receipt side, can fnly
be preserved over an undefined part of national income.* In
fact, we get only a very [)artially new estimate of national income
from the Census. The “net prodiicf ” is exhausted (after main-
tenance of capital) by rents, interests, profits^ salaries and wages,
and these all appear or are estimated jn income tax returns, “inter-
mediate “ income and wages.

Unfortunately, the Report <!'*os not provide material for
checking any of the former estimates ( f income, owing to the
classification by industries as a whole, vvhicb is necessarily
adopted. Thus, the agricadtural ioU'J Vv'mjd only enable us to
get at the unknown total of farmer s piolitS,^ if we could isolate
agricultural rent and interest and wages by other reckonings, and
the estimates are so hazardous as to make the remainder doubtful
to a prohibitory degree ; and oth^r cases are similar. «

It w^il) have bt>en noticed that duties are included in the vj^liie
of goods io the consumers, and therefore as part of the national
income, while the governmental services for which the duties pay
are not included. Now a man receiving a professional income of
£500 in return for services, may pay £15 in direct taxation,
corresponding to £15 worth of governmental services, and have
so much less with which to jmrehase q^her services ; whereas, if
he spent £10 on spirits and tobacco, he receifes the £10 worth
of gpods himself, and also pays for (say) £7 worth of government

^ Practically farmers’ incomes are onlyineluded in the jjicoA«*tax net assess-
ments if their rents are over £480, and they are then assumed toSjg one- third of rent

1913] OBNStJS OP PRODUCTION AND NATIONAL DIVIDEND

services, as when a purchaser J)uys a pound of tea and receives
a handsome picture into the bargain. This specious argument,
that in indirect taxation you get government services for nothing,
has, I think, not been noticed by Tariif Eeformers !

In the method of the Eeport the government services paid
for by indirect taxation are not counted as of any further value.
This seems an unnecessarily complicated method ; it would have
been simpler to leave out the addition to net product, and value
the services in full, liut perhaps the writer wished to force
readers to consider interesting problems relating to consumers’
surplus. G».x)ds in general are worth to all hut the marginal pur-
chasers more than they oay i‘(»r them.

In the case ol.' gv^ocLs whose price is raised by taxation, so much
i» cut off from the C(ins!niiers’ surplus and so much is spent on
public 8€%vi(*e.] ; the report assumes that the value of the services
equals the an ’hint of taxation, hut of course it does not follow
that this value equals the de^triment to the consumer. In the^^
cSse of direct taxation the taxed individual is the poorer by pre-
cisely the amount of the tax. Hence, whatever way w'e make our
measurements, we are involved in difficult questions of theory
and practice. The difficulty originally arises from the fact that
value ill exchange", which affords the only possible method of
iValuii>gj)roduction, depends on other factors as well as on the cost
of production.^

A shifting of taxation from diret^t collection to indirect would
involve (by the method adopted) , if the prices rose,, an increase in
the value of goods and a decrease in the value of services; but
official services are equally valuable whether paid for by duties
or from income tax, and we can only harmonise the calculation
by supposing that lost c^msurpers’ surplus is turned into official
„fi^vices behind the back of the adcountant. But wffien part of
the incidence of, ftixation is on. the manufacturer (and, of course,
ixi the*case of monopoly a great part of it may be), the net product
of manufacture,, as valued, would fall to the extent of part of the
yield of the duty. Taking the extreme case where the manu-
facturer paid the whole of the duty and did not raise the price of
his goods it appears that the corres^xinding amount of official
services w^ould completely disappear from the aggregate income,
whereas in fact there would only be a transference of outgoings
to the government from the income-tax payer to the manufac-

^ So that, e.g. the first and sixth items in Table I. become £680,000,000 and
£58,000,000 ijirtead of £690,000,000 ja»d'£48,000,000. Then the eleventh item would
be reduced from>^76,000,000 to ^365,000,000 by the subtraction of an additional
£10,000, OA) from item (v, ), p. 68.

THE ECONOMIC JOURNAL

[march

iarer. On the other hand, in the same case the net assessments
to income tax would be reduced, since the manufacturer is only
assessed on his profits, and Table ]1. and Table I. would remain
comparable. It appears, then, that the aggregate national income
may depend on the method of taxation, by wdiatever method the
aggregate is estimated, oven if we suppose that taxation has no
effect on the amount of various classes of goods produced. The
more successfully taxation is transferred to monopolists, the less
the apparent incon^e.

These, and other considerations not arising from the re|)oft
(such as the dilference of marginal utility of money to persons of
various incomes, and the continual changes in purchasing power
of money), tend to show that Aggregate Income, however
measured, is of tlio nature of a numericariotal, whose cont^ts
depends on arbitrary definition, and has no very closeeTelation to
welfare. Nevertheless, as is generally the cas:: with statistical
totals, it can be for observing changes so great as to render
unimportant the probably minor changes in the nature oL its
content, or changes over a short j)eri()d when there is strong
reason to believe that “other things*’ are not only “supposed
equal” but are, in fact, nearly “equjfl.”

Apart from the analysis of tlie National Dividend the results
of the Census are mainly of statisti(*.al, rather than pure economic,
interest. Summary excel pis from rhe tables ace to giv('

rise to misleading ideas, j’hiis, one !S tempted to say that the
net output per wage-earner enqdoyed m niiiung an»l industry was
i'lK), that (from rdhci' data) .innue] average earnings per wage-
earner (man, woman and child) was irobaldy about £50, and that
consequently about £60 is pDduced ptr wa!ge-earner beyond his
w^ages ; wdiile in agriculture the net output per ].>erson occupicnl
(including farmers) was l'83«iii Great Britain, where the average
wage w^as ])eri.uj/r, £45. But these figures are^subject to so many
qiialifica.tions as to b(5 nearly valueless. The net output has to
provide for salaries, depreciation of capital, and weai and tear of
machinery, interest and advertising, as w^ell as rents, profits,
earnings of working em])l<)yers, and w^ages, and all these factors
differ enormously from industry to industry. In some cases the
wage-earner receives the great part of the value of the output, in
other cases less than a quarter. The detailed figures are, on the
other hand, very useful, for it is [wissible to teVl within limits in
the case of separate industries, what is tlie pr()|>ortion of w'ages
to the value of net or gross output. Thus, in the cotton industry
about 73 per cent, of the gross output or selling wqjue of the goods

1913] CENSUS OP PBOD0CTION AND NATIONAL DIVIDEND 61

goes for materials (including coal), about 17 per cent, to wages,
and about 10 p^er cent, to tl\e otfier factors just enumerated; or,
put otherwise, the wage-earners receive 68 i>er cent, of the net
output. This suggests that afte’- depreciation is niet, and adver-
tising, selling expenses and salaries are paid, there is no great
margin for increase of w\ages at the expense of profit.

Other very useful lines of analysis arising irorn the figures
concern the relative im|)oitance of different industries as sources
of production, and of the relation of home production to imported
raw materials and imported mam fawured goods; hut here, again,
so much depends on classifies; ion, and there is such enormous
variety, that summary quotation is useiess.

A. L. Bowlbw

REVIEWS

Wealth and* Welfare, By A. C. Pioou, Professor of Political

Economy in the University of Cambridge* (London :

Macmillan and Go. 1912.)

Obiginality has sot its unmistakable mark on Professor Pigoij’s
work. But this distinction is not inconsistent with some resem-
blance to great predecessors. The author apj>eaiii? to have drawn
inspiration from two. very high authorities on wealth and welfare.
The good which philanthropy and statesmanship should seekutiO
realise is detined by him in accordance with Sidgwick’s utilitarian
philosophy ; to investigate tlic means conducive to that end he
employs the methods perfected by Dr. •Marshall. Like Sidgwick,
Professor Pigou is not o].)en to the imputation otmaterialism which
is sometimes brought against ecoiuuriists. Ho lays dcwvn ^wo
propositions : first, that welfare includes stj^es of conscu^risness
only, and not material things gr coiulitions ; secondly, that wellare
can be brought under the category n! greaier and less*’ {Wealth
and Welfare, p. 1). These projjositions (wirn their context) do
not postulate a psychology (like tl al of J. R. Mill) specially
favourable to utilitarianism ; but they d(‘ i)oStulate the absence
of a metaphysic (like that of T. Green) which derfies practical
significance to a conception* such as '‘aggregate w^elfare ” ^or ^
“satisfaction.” Much of our ^ author’s philosophy rt)calls
Sidgwick’s utilitarianism. For example, the follov/ingt senti-
ment is not often met with outside the pages of Sidgwdek : “If
the life of an average workman contains, on the whole, more
satisfaction than dissatisfaction, an increase in numbers, even
though it leave economic welfare per head the same, involves an
addition to economic welfare in the aggregate” {loc, eit, ]>, 29).
Like Sidgwick, Professor Pigon is prepured to admit that, in
Sidgwick’s phrase iPolitics, p. 5S3), “One persoli may be more
capable of happiness thim another.” According to Professor
Pigou, “We may sometimes be able to say that the m^re cultured
Class A, hciis a keener eirppreciation of, and derivej^mofe satisfac-

MARCH, 1913] PIGOU : WEALTH' AND WELFARE

tion from, practically all objects than the less cultured Class B
does” (p. 48). On the assumptiotj , however, of similarity of tem-
perament (p. 25), we may conclude with Sidgwick that the more
equal distribution of wealth tends to increase welfare. To diminish
inequalities in the distribution oi the national dividend (among
the members of the nation) is accordingly one of the^modes of
welfare of which Professor Pigou investigates tliC conditions in
one Part of his treatise. To diminish inequality of dititribution
in time is the proximate end to which another Part is directed.
Much the longest of the separate Parts is directed to the increase
of the national dividend. In investigating causes conducive to
these proximate ends Proh'sisor Pigou biings to bear a mass of
facts and a power of reasoning which in their combination find
a parallel only in the Principles of Economics .

The in^luct^ve element of the treatise, being necessarily
diffused, cannot **tasi1y be exhibited liere. We have not space to
exemplify our author’s frequent citations of .relevant evidence.
Oun readers must take on trust our impression that the verifica-
tion of general leasoning by s])ecific experience has been ade-
quately performed, especially with regard to British labour and
charity. Professor Pigou seems to have fully ulilised the informa-
tion obtainable from official reports and contemporary economic
literaturs. He is awwe, of coarse, that facts are often not
apposite. • What he says about one of the methods of increasing
national income which he investigates — Purchasers’ Associations
— is probably of wide application : “No great w^eight can reason-
ably be attached to historical examples, and we are driven forward
to an analytical study ” (p. 239).

* Of the numerous* valuable contributions to economic theory
which are presented in this treatise, the most brilliant, no doubt,
are those which assume the form of mathematical reasoning,
feut^^ •considerable* degree of practical imjx)rtance attaches to
other arguments which take the classical form of deduction from
psychological generalisations. Of this simple type is the argu-
ment directed against the popular reasoning that if a person is
enabled, by a subsidy, to •wwk for less, he will therefore be
willing to work for less (p. 348). The experience of the old
Poor Law is not so conclusive as is commonly supposed : the
subsidised workmen did i|ot acce})t a wage lower than the w^orth
of their work to their employers ; rather the worth of their work
was very small, owing to the system of differential relief (p. 349).
Of the same simple type are some deductions concerning the
consequences'^of ..transferring resources from the rich to the poor ;

THE ECONOMIC JOURNAL

[march

a Bice distinction being drawn between the fact and the expecta-
tion of such transferences. It niakes a great difference wliether
the transference is voluntary or coercive ; the expectation of the
ferm^r leads to a diminution of the national dividend, while the
new motive implied in the latter tends to an increase of waiting
and effort, ^and so of the dividend (p. 365). Again, the expecta-
tion of taxation to be levied at some future lime will have a
smaller restrictive influence on investment than an annual levy
(p. 375). The influence will be particularly small when the tax
is postponed till the inveatous death. This consideration is to
be set against, and may overbear, another presumption from
which ‘*it follows mathematically that, in general, the death-
duty method [of taxation] is likely to trench on capital some-
what more than the income-tax method ” ('p. 353). , r.

In the last proposition we have j)aRsed from simply psycho-
logical deductions to such as involve some tinoture of mathe-
matical reasoning, J)ut not more than is generally presupposed
in modern economic treatises. Even so classical an econon>ist
as M. De Foville now employs curves of supply and demand. In
this category we may place Professor Pigou’s theory of differential
wage-rates, which occur when the wage payable for a particular
kind of work performed by some men (say the more competent)
is artificially raised above the wage payable for the same work
performed by other men. With a mindnum of aid frorfl mathe-
matics it is argued that artintial wage containing a differ-
ential element is less likely to imply a real transference from the
relatively rich as a body to the reialively poor as a body than one
which is free from such un element, ‘ p. c35). The properties of
the demand-curve afford im])ortant deduiJtions. The great
elasticity of the demand for labour is used as » premiss in
arguing the old question wrfxetlier labour-saving machinery is
likely to be detrimental to the labouring classes. Going Ixyond
Eicardo and J. S. Mill, Professor Pigou conclrdes tha,t if an
invention of the (dass considered diminishes the portion of the
dividend accruing to labour, the magnitude of the" diminution
must be very small indeed (p. 89). And this, even on the sup-
position — which is, of course, far from being true in general —
that the commodity in respect of which a constructive idea has
been discovered is not consumed at all|by the working classes.
The same premiss employed in another argument leads to a
conclusion of quite classical trenchancy : that ‘'generally speak-
ing, a transference of resources from the relatively rich to the
relatively poor, brought about by interference vjtb’the natural

3913]

(

PIGOU : WEALTH AND WKLPAKE

wjurse of wages at any point, k unlikely to do otherwise than
injure the national dividend, and there\\ith in the end the real
income of the relatively poor” (p. 343).

We shall notice in a separate paragraph some more technical
matters which we c-annot hope to make interesting to the general
reader. In this^ category is probably to be placed Professor
Pigou’s “curve of marginal supply prices.” This original con-
struction is useful as rendering more distinct, by contrast, the
conception of a supply-curve It is still more useful as '^ii adjunct
to the test for maximum utilisal.on*of resources, the far-reaching
principle iiiat the more nearl y c<^ual marginal net products in all
uses are, the larger the dividend is likely to be. This principle,
as applied by Prub .^sor Pigou, is one of the splendid novelties
oqpurring in this treaUso the iuiportanee of which a reviewer
cannot be^expv/;ted upon short notice to gauge accurately. It is
certainly of gre*il theoretical interest. Another difficult theorem
relates to tluj shape of demand-curves. The}' are in general
vo^.cavey according to Professor ITgou '((). 210, and p. 402, w^here
“convex” is doubtless a misprint for “concave”). This state-
ment may give pause to the reader who recalls that demand-
curves are treated as convex by one of the highest authorities on
mathematical economics, Dupuit. His view’ is referred to in a
former number of the Economic Journal (Vol. X., p. 287) in
connectifln with the suggestion that in certain circumstances of
common occurrence the locus may, be treated as a right line.
There are thus before us three propositions : tljat, j)robably,
the demand-curve is concave, is convex, is neither. Paradoxical
as it sounds, all three propositions may be right. For the first
Jwo refer to differeni; circumstances ; and when we are ignorant
which of thf? two cases is present, the third, the intermediate
statement, may be approx)riate. Bupuit supposes that, as the
price’ fe lowered, mw strata of customers are reached ; and so the
curve stretches away from the axis representing price. Professor
Pigou must be understood to sup|X)sc that the customers are, or
may be, trealbed as a homogeneous body. Indeed, the more exact
statement of his doctrine is* that which he has given in an earlier
W’ork to which he refers. “In the case of a typical individual,”
the third differential coefficient of utility (with respect to money)
is negative. The third cMflerential coefficient of utility makes its
unfamiliar appearance in connection with another doctrine,
namely, that “a diminution in the inequality of distribution, in
the sense of a diminution of the mean square deviation from the
mean income, probably increases satisfaction.” This follows from

No. 89. — ^voL. xxiii.

THE ECONOMIC JOUKNAL

[march

the expression of (aggregate) utility in ascending powers of the
said deviations ; since the first term of the expansion is zero, the
second negative, and “we know nothing to suggest whether the
sum of the terms beyond the third is positive or negative ” (p. 25).

The last proposition employs, in addition to the calculation
of utility, the secemd mode of psychical mathematics, the calcula-
tion of probability. The probability involved is of the kind which
has been called “unverified^’; based on impressions w^hich are
the record of general experience, rather than on specific statistics.
This species of probability is largely employed by Professor
Pigou. It is the basis of his proof that the pursuit of economic
welfare is compatible with higher aims : “When we have ascer-
tained the effect of any cause on economic' welfare w^e may,
unless, of course, we have evidence to the contrary, regard this
effect as probably equivalent in direction, tliough not in magni-
tude, to the effect on total welfare” (p. 61). The “unverified”
species of probability is also employed in the construction of a
new index-number (p. 47). Again, the principle underlies ’’the
presumi)tion that certain phenomena are independent, or, at least,
not closely correlated. Thus, the increase in the variabilitj^ of
real earnings in one industry mighJ I>e so correlated with the
(undiminished) variations in other industries as to diminish the
variability of aggregate earnings (p. Oil). So \ariations in the con-
ditions of business might co/iceivjibl^y be comfx nsalcAl as to their
psychological effects by mistakes in the business man’s forecasts
(p. 454). But such correlations are not probable. For “when
a magnitude is made up of two partt , each of which varies more
or less independently of the other, the variability of the whoje
is likely to be larger, the larger is the varial)ility of either part V
(p. 454).

The ordinory or statistical species of probability makes its
appearance in the proposition “that the precision of an average
is jiroportioned to the square root of the number of •terras it
contains” (p. 141). The principle is largely employed in
connection with the fluctuations of business and labour. This
species of jirobability enters along with utility into the following
theorem. Let A and B be two similar ixjrsons who have each a
fluctuating income, or, more exactly, “a variable consumption.”
Let the normal consumption of A be fiiuch larger than that of
B. Then “the economic welfare of A and B jointly is increased
by any system of transferences whicli, while leaving the average
consumption of each unaltered, diminishes the variability of B’s
consumption, even though this diminution take^ place at the cost

1913]

Piaou : WEALTH AND WELFABE

of an increase in the variability of A’s consumption” (p. 402). It
is similarly concluded that ‘.‘the exposiirc of ^*100 to a scheme of
uncertainty whose rang^e is narrow, is easily seen to have a
smaller value in the market than the exposure of this sum to a
scheme whose ran{je is broad” (p. 100). P>at does the latter
argument require as a premiss — what the former argument no
doubt does — the new^ proposition above notice d regarding the third
differential coefficient of utility ? Is not the propositioi' regard-
ing the ^second differential which is commonly emplojed in the
theory of insurance sufficient ? f >at it is with diffidence that
we suggest a correction in a matter reUiling to insurance.
For our author’s troatmcLt of that .njbject is particularly lucid
and instructive. He arrests atlentjon by Hnnoiincing — in con-
niption with the ad\w:ntiigos of “voluntary transfennee ” to
which we^ha.'* referjed — a way hy v\hicli “transference can
be made economically f)rofftable to the txansfeior.” The way is'
simyily muiiud insurance. Those who are hirtunate and escape
th« loss which has been insured agaii^st, may be regarded as
relatively ric*h, making a transierenc/} to persons who have
})ocome relatively floor (p. 3G6). It pays to undertake the risk of
such transference, even though the adjustment between the
premiiaris j)aid the risks carried by different mendiers is
imperfe ;t — wdthin limits. The limits are less than ordinarily
narrow ill the (?a.se of wwkpeople (p. 367).

From the extracts which we hajk^e givtm it will be gathered
that this treatise abounds in new ideas. But i^ is .impossible by
extracts to do justice to the author’s logical arrangement of topics
and lucid order.

Ordinis haoc virtue erit . . .

IH jam nunc dicat jam nunc deblintii^ dici, Pleraque difforat. . . .”

iTie Miter part of ihe Horatian, maxim proves a hard saying to
many. .But our author never dilates upon the obvious, never
diverges injo the^ iiTelevant. He goes straight on, with even
march, as it were along a Homan road. Flowers there are by
the roadside, but not so freqfUent or so gaudy as to distract atten-
tion. Epigram is used only to clench argument. For example,
as against the now fashionable doctrine that progrt^ss depends only
on breeding, not at all oft education and economic conditions, it
is argued that thSugh educational conditions may not influence
offspring in the physical world, they do favour new births in the
wwld of ideas. “Environments, in short, as well , as people
have children” (p. 59),

F 2

THE ECONOMIC JOURNAL

[march

New ideas well presented are applied to many old problems.
Even such familiar themes as the public control of monopoly
and the public operation of industries are enlivened by recherche
arguments. But the new weights put into the scales of delibera-
tion are not over-estimated. For instance, with reference to the
waste of resources caused by cost whi(*-h hinders the movement
of workpeople and by their mistakes in judging what is to their
own interest; it is shown that where error of judgment exists, a
cheapening of the cost of movement may prove socially injurious.
The case is not merely acadefuic, but is applicable to the aimless
wanderings and useless changes of situation which are sometimes
occasioned by facility of movement (p. 119). “But these excep-
tional cases are not subversive of old-established beliefs.” When
w^e are contemplating, from a general poinL of view, the conse-
quences of these diminutions [in cost of movement and in falsity
of judgment], “it is not the possible, but ihc probable, effect
that concerns us’\(p. 121). With regard to the more familiar
considerations which Professor I^igou from time to time qipte
properly throws into the balance, we think that he might with
advantage have more frequently referred to standard versions of
similar arguments. Thus, in conned ion with the failure of
harmony between private and social interest (p. 158, and context),
there might have been expected a rcferen (‘0 to Bidgwick’s masterly
treatment of that subject in the thud book Of bis' Political
Economy. Again, when J:^rofess^a tigov places among the
ultimate effects of an artificial wage-rate the cin iiiastance “that
the reward of employing power and waiting h\ industries in
general being somewhat reduced these factors are likely to be
forthcoming in somev\hat dinuaisheu quantities” (p. 313), he
might have referred— with an expression of assent or qualifica-
tion — to some of the leading writers w'ho have dwelt on that
circumstance.

The origiiiality which we have noted with res))ect to theory
makes itself felt in several practical suggestions. The author has,
we believe, only one precursor in the suggestion, that it is
possible to increase the national dividend by imposing differential
taxes on industries governed by the law of diminishing returns
(p. 179). Many suggestions are directed to improvements in
distribution. Munificence might be eijiiouraged by honours and
decorations, a new “order,” not interfering with the attractions
of old ones. On more 1 ami liar lines Professor Pigou advocates
a modified form of income-tax which should exempt resources
devoted to investment in general (not to insurance only) (p. 371).

1913] piGOx; : wealth and welfare B9

He mentions with approbation ♦Eignano’s plan of taxing inherit-
ances with increased severity at each successive devolution
(p. 376). But he woula confine taxes on unearned increments to
“windfalls’* (p. 370). He would accompany transferences from
the rich to the poor with strict conditions (p. 392). He is in
favour of “taking some cautious steps” towards a very drastic
treatment of the very unfit (p. 55). Ainong plans for reducing
fluctuations of earnings there is adduced Mr. Balfour’s sugges-
tion that when industry is depressed, a bounty should be given
to firms nmking for foreign orders, in such wise as to enable
them to accept contracts. '.Vhy not to firms making for British
orders, suggests Profescr.r Pigou (n. 481). He is “inclined to
believe ” that a 'very considerable net benefit would residt from a
n?cthod of sienlying prices such as tliat proposed by Professor
Irving FiShei 488; cp. p 464). There would be available for
the purpose the index -number proposed by Professor Pigou, in
which the prices of commodities at one of two compared epochs
are weighted with the quantities of the commodities consumed
at the other epoch fp. 46). One of the most ingeniously deduced
proposals is the one about, the value of which we are least con-
fident. With a view to maximising the national dividend, it is
concluded that in the regulation of railways discrimination, or
the “value ot service” principle, should be adopted at one
(probably brief) stage of a country’s development, and “this
principle should give place to simple competition, or the cost
of service principle, as soon as population has growfn and demand
has risen sufficiently to lift it out of that stage” (p. 234).

The last topic yitroduces our principal difference with Pro-
"fessor Pigou^. He seems to us in his estimates of probabilities
not always to attach sufficient ^weight to authority. For
inskui-ce, on a question of definition, the use of the term “joint-
cost,” more defertfnee might haTve bexm shown tow^ards Professor
Taussig* (p. 216). We think it very improbable that an “accident
of language” (p. 217) should have conduced to a “fallacious
general argument” on the part of Professor Taussig (p. 219).
The following passage brings out the matter at issue : “Principal
Hadley and his followers, not content wuth demonstrating that
fact [that a certain casi^ m<iy occur in practice], add, without
argument, that this case is typical of the whole railway world,
and suppose themselves, tlu^refore, to have proved that the value
of service prinicple ought to be followed in the determination of
all railway rates. Such an unargued inference is plainly illegiti-
mate ” (p. 281). It is plainly legitimate, we think, to defer to

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[march

the unargiied judgments of thef leading authorities on railway
economics with respect to the question whether a certain abstract
case may be taken as typical of the actual facts. This is just
one of those matters which are amenable in the Aristotelian
doctrine that we ought to attend to the unargued pronounce-
ments of the practically wise, v;ho have acquifed by experience
a certain pownr of mental vision.

Here arises the question : How far do our author’s theories
belong to the category of practical wisdom, or to that higher
kind of science which the philosopher distinguishes as grand and
wonderful and difficult, but not useful for human purposes?
Mathematical economics are certainly useful to some extent ;
but does the further elaboration which tlrat study has received
in this treatise imply a correspondingly large, contributioil to fhe
Art of Political Economy? The analogy of mathgmatical physics
does not help us to answer this question : the calculus of utility
and probability is* something so peculiar and unique. ‘*Ai
posteri L’ardua sentenza 1 ”

F. Y. Edgeworth

Principlrs of Economics. Vol. II. By N. G. Pierson. Trans-
lated from the Dutch by A. A. Woizel < London : M**.cmi]lan.
1912. Pp. xxiii-hOlS- Price JOs. net."' *

Economists have been looking for this second instalment of
Mr. Wotzel’s translation of P erson lV»r some time, ten years
having passed since the first vohin ;■ ypfujared. It is worth the
waiting for; the .|iia]jty of tho. transhition well up 1o the high
level of its ])rodecessor, and ii seems so free from doubtful passages
that the last bOO pages jirobably Idse little from missing revision by
the author. One cause of the delay was the accidental destruc-
tion of a pari of the mamiscri|jt. The present volume covers
production and the levemies of the State. One long chapter
deals with the place of self-interest in productiefn. Qualifications
of the doctrine of maximum satisfaction are brought out by an
examination of concrete cases, for instance, the smoke nuisance
(the total loss occasioned by which probably exceeds to an
enormous extent the sum of the indijudual savings which are
made by disregarding it) and the development* in railw^ay trans-
portation for which State action has been responsible. But there
is no attempt to distil from the facts the fundamental principles
which may be laid down in these matters, or to measure gains and
losses against each other — as is done, for example, by, Professor

1913] pmBSON : pkimciI^.es of economics 71

Pigou in his recent book. Ch short, the method of the book
tends to be that of pre-MarsRall Economics; but, within the
scope of his method, the author’s acuteness, independence, and
judgment are, on the whole, beyond praise, though possibly the
common sense has here and tnere a trace of the hardness of
outline w^hich, for a time, made English Political Economy so
unpopular.

Dr. Pierson’c bias — not pr mounced — is to justifj the ways
of trade. Thus: “Like a bodily pain (tiade depression) serves
as a useful warning ; it does m^-re * it gives a powerful incentive
to do what is urgently needed to be dont.. We might even go
further and say that, Inunan nature being prone to sluggish-
ness, depressions provide the stimulant without which there
\VouId be no progress.” But the description of depressions and
crises is f^honoighly done, though the problem of the periodicity
of the forrnem is hardly approached. The same closeness of
observation and absence of the refinements of theoretical analysis
i^iarix the treatment of trade unions, about, wliich the author is not
afraid to speni; his mind. He inclines to think that “the power of
capital” needs “the presence of some other power to hold it in
check, and to inspire fea» where the sense of duty or humanity
is lacking,” and .allows that trade unions “possibly enable a
working-class population, which has already risen above the
ordinal^ levePof welfare and enlightenment, to rise still further,”
However, those whp expect from Dr. Pierson’s belief that trade
unions “can never be the means of raising a working-class
population which still occupies a very low level,” ahd his qualifica-
tions of the doctrine of maximum satisfaction, that he must fall
into the arms of the more moderate socialists, will find them-
selves disappointed. “When we sound the depths of their (the
socialists’) philosophy, we ^oon^ touch the bottom. Lassalle
pcitfr^rms the most astounding feats in logic . . . the ccouomic
wisJoqi of Fliirscheim is belo^ the lowest conceivable level. . . .
(Marx’s) errors are such as make it difficult for us to accept him
as a strictly scifintific thinker. Let us not look for science among
these men, but rather foj’ expressions of feeling. . . . Till now
the strength of the Socialists has lain solely in their criticism.
By that criticism, even though it be exaggerated, we must
endeavour to benefit, far as constructive theory is concerned,
nothing of any#/alue has yet been contributed by Socialists.” On
the subject of population, Malthus is closely followed; P. Leroy
Beaulieu’s alleged law, to the effect that the rate of increase falls
as civilisation advances, is attacked ; and neo-Malthusianism is

THE ECONOMIC JOURNAL

[march

outspokenly discussed. To Protectionism Dr. Pierson is by no
means favourably disposed, as he makes plain in the course of
a vigorous discussion extending over nearly 100 pages, in which,
however, there seems to be nothing strikingly novel. The land
question in its relation to production is comprehensively and
judiciously treated. On questions like this Dr. ^Pierson is at his
best ; as he is also (as one would expect from a Finance Minister
of his speculative bent of mind) on topics of Public Finance. It
is notable, however, that the modern demand for Progressive
Taxation, beyond what is neeTded “to provide an easy transition
from total exemption to full taxation,” is regarded as indefensible.
Taken as a whole, Dr. Pierson’s work is leisurely and spacious,
and treats of society in masses after the grand manner of the old
school, which, it is to be hoped, will never expire. *

S. J. Chapman

Political Economy , ' By S. J, (’hapman. (Home University
Library of Modern Knowledge.) (London : Williams and
Norgate. 1912. hs.)

“The explanations that will be jVesented arc those which
became current after the exa(*t analysis vbegnn by Ji^vons and
L&m Walras had been ])Ojrect(‘d and ap]>licd to the wdiole field
of economic j)henomeiia by later writers, particularly by Dr.
Marshall, Though the new .generalisations were suggested at
many points by mathematics, it is perfectly easy to represent
them in simple InngiPigc whi'-b implies no mathematical know-
ledge ; and 1 sliall try in do so” (i)p. L 8).

If tlie implications of the first of these two sentences, and
the statement eai))r»died in the se(;ond, are accepted, 'criticism of
Professor (diaprnan's i>ook resf)lves itself into unqualified admjjra-^
tion of tlie judgruent, skill, and subtlety which it displays.

But neither the implications nor the assertions seem "to the
present reviewer to be above challenge. To begin, with the latter,
which can be more briefly dealt with than the former. On p. 75
we read, “ihe price of a commodity ^dll be tlie price at which
equal quantities are demanded and supplied, provided that a
slight addition to the supply would mean a supply price above
the demand price, and a slight rednctir^i of the supply would
mean a supply r>rice below Ihe demand price. There may be, but
there is not likely to be, more than one such price. It is only
possible when increasing returns rules, and if it does, is least
likely when demand is highly inelastic.” If the reader who has

1913] CHAPMAN : POLl^ICAIi ECONOMY 73

never seen or constructed a figr^e in which the (so-called) supply
curve cuts the demand curve in three places, twice from below
and once from above, imderstands the significance of the proviso
contained in the above extract, and also perceives that a point of
the unstable equilibrium, which that proviso excludes, must come
between the twcv points of stable equilibrium which it allows to
pass, Professoi Chapman may call him as a witness in suiiport of
his assertion that it is “perfectly easy” to represent such con-
ceptions effectively in non-mathematical langiiage. Fiat experi-
mentum. 1 would not for the x.orld prejudge it.

The implications of the sentence quoted above need more
lengthened consideration As interpreted by Professor Chap-
man’s work, at any rate, they involve an approval of Pr.
Marshall’s deliberate (and very chivalrous*) method of minimising
and disguising to the utmost extent possible the revolutionary
character of Tee ne\/ methods of which he is so eminent an
expf)nent. This attempt to preserve as much as possible of the
oW terminology, and the traditional divis'ons and contrasts, in the
face of the new principles, and to shew how much substantial
truth the admittedly imperfect statements of earlier writers con-
tained is one of the leading characteristics of Dr. Marshall’s
work ; and it stands in marked contrast with the somewhat
tpiculent announcement made by Jevons to his brother, “In the
last few months I liave, fortunately, struck out what I have no
doubt is the true Theory of Economy, so thorough-going and con-
sistent, that I cannot now read other books on the subject M'ithout
indignation.” To find fault with Professor Chapman's handbook
involves something very like a contention that, of the two,
•Jevons’s' indignatiori is likely to inspire a more fruitful treatment
than Dr. Marshall’s reverence k

And, indeed, the truth is that Professor Chapman constantly
enunciates trencha^it generalisaiiions which cut across the classical
traditiolis and reduce to mere practical differences of stress what
they had taken jas theoretical differences of principle ; and then
forgoes all the simplifications these generalisations suggest in
order to preserve as i>rim3,ry the distinctions which they have
really reduced to a secondary position.

Thus on p. 172 we^ead, “Workpeople have a value to the
employer because . . . they create what has ... a value to the
consumers. . . . f^irnilarly, the value of every other agent in produc-
tion is the transmitted value of what it adds to production at the
margin.” Now “cost of production” is sim]r)ly the sum of the
market values of the agents or fnctors of production, and their

THE ECONOMIC JOURNAL

[march

values are confessedly nothing but elements in the value of the
product, dependent in its turn wholly upon the relative estimate
formed by the consumers of that product in relation to others ;
and yet “cost price” is made throughout Professor Chapman’s
book to figure as an independent and, in a sense, antagonistic
force, generating curves of “supply i:)rice” co-prdinate with the
curves of “demand price,” from which, on his own showing, they
must derive the whole of their vitality. Indeed, the most in-
genious and original chapter in the book is devoted to an elaborate
attempt to work out a complete 2)arallelism betw^een the two. It
is perfect as a piece of deductive reasoning, but it rests upon the
startling assumption that every firm has unrestricted command of
capital and of markets, and determines its output solely on con-
sideration of the dimensions best suited to “the strength of its
central organs ” (p. 81). At the end of his study, Professor
Chapman seems to confess that his initial hyp6chesis is quite
remote from the facts. Could he not have remained in close touch
with those facts throughout his investigation if he had carried the
great principle he announces boldly through? He would then,
surely , have treated the whole direction of resources to ends as a
continuous selection between alternafives, guided throughout by
a weighing of the significance of the antici]>ateJ results, in which
the “cost ” of adopting any alternative is simply the relinquishipg
of some oiher alternative ; reward and sacriflce alike being mea-
sured and determined by the taitirnate significance of the respective
products, as anticipated by tlie pr(»ducers; the ]>oints at which
things are bought and sold simply registering the relative success
or failure of the anticipations under which the alternatives were
selected, and tending to correct them. * •

In the same way Professor Qhapman perceives* quite clearly
that the c<inception of “ ditninishing returns” was originallj^,
arrived at by treating one of th<^ factors (land) as constant, and
applying successive “doses” of the other facb^rs to it; and also
that this nadhod is equally apf dicable to any otl^er fa^ctor (labour,
for example), and further, that w^hereas “labour” in the mass
is in('apable of rapid increase, yet if may be diverted from one
purpose to another to an indefinite extent, and that the same
holds of land ; and like^vise that one factor of production may
change its proportion to another and yet the two “doses” thus
differently composed moy be equated; and tiiat all values of
factors of production are derived from tlie value of their products.
Nevertheless, he maintains the old dictum that rent does not
enter into cost, keeps the distinction between increasing and

1913] DIBBLKB : THE LAWS "uF SUF^LT AND DEMAND

diminishing returns as nearly las possible in its old place, and
practically excludes land from his general formula of distribu-
tion. He defines rent u>s payment for differential values of any
kind (whether of land or labour*, for instance), and would admit
apparently that it does not correspond to what the farmer pays
his landlord any more than to what a rich man pays a fashion-
able surgeon, and yet he treats it in direct connection with land,
and in doing so seems to conceal as far as he can all the
theoretical identities he has recogpjsed betv/een laud and other
agents of production, burying them under insistence upon differ-
ences in degree whif‘h he i to maintain distinctions tint no

longer rest upon princip'e.

But it will be pewived that all this is a tilt agamst the
authorised current treatineut oi the subject, and not a
criticism ^of ^ ProlCBsor (^-hapmaii’s book specifically at all.
(rranted that accepted metlu^ds are on the whole satisfactory, this
bock niay be taken as an expositiim that ‘leaves nothing to be*
ftesired. Apart from all controvertible or controverted matter, too,
it is particularly admirable in its insistence on the fact that “it is
the impalpable subjective^ things in life, without a price, which
give exchangeable goods their value ” (p. 164), and in the firmness
with which this central principle is held in the luminous and
judicious survey o| “problems of distribution “ which closes the
volume.

Philip H. Wicksteed

The Lawft of Supply and Demand. By G. B. Dibblee.

(London : Constable and Co. 1912. Pp. 289.)

This is a pugnacious book.- It presents, in its author’s words,
“BWiithing less than a direct assault on the orthodox theory of
political economy as established by early English economists.”
No emendations, however thorough, will suffice. The whole
structure must-be “swept away.” “Infinite and reverent modi-
fications of obvious errors have been used to buttress it up, but
they were unnecessary, and they ought not to save it now.” Such
is the challenge. The author writes from the point of view of a
business man, irritatel by the unreality of the economic theories
he imbibed at college. To do justice to his position it is necessary
to quote his explanation in full : —

“My present study is not founded so much on a rather
limited reading as on twenty years of reflection and experience in
more tfcan one kind of business in three countries. The result is,

THE ECONOlilC JOURNAL

[march

unfortunately, a certain amouni of unfairness on niy part in
delivering apparently random criticisms on a body of economic
doctrines rather vaguely indicated as the orthodox English school ,
without selecting any particular author or book or even any
precise argument, except in the case of Mill’s law of value. It
is equally true that the later defenders and modifiers of these
doctrines have been neglected in these pages, and no notice has
been taken of the number of cases where criticisms have been
accepted and embodied and at^iacks skilfully parried. If this work
were put forward as primarily scientific, such omissions would be
indefensible; yet since its object is practical, and as in order to
be practical one must he brief, concentrated, and concerned
chiefly with exposition rather than with criticism or controversy,

I have been obliged to neglect the unessential. I consider ttie*
modern modifications of the old school iinessen^iaL^ The old
school stands unreplaced. Its original language is still current,
and the men between forty and fifty, who guide the actual
currents of business, know no other.”

This explanation does not suffice to avert the criticism w^hich
it anticipates. Among the “attacks” which have been “parried ”
arc many which Mr. Dibblee himself labours in this volume,
generally through some misconceptions of *the nature of the
doctrines attacked. Again, fhe criticisms wbhji “haye beufi
accepted and embodied ” includo a number of Mr. Dibblee’s own :
and as when he expounds them he evidently attaches to them
great importance, it is not easy to see w'hy they should be dis-
missed as “unessential” when they become the accepted modifi-
cations of orthodoxy. His answer seems to bp that business men
are not aware of these modifications, but still talk “the original*
language.” But this, though a ^ood reason for increasing the
blame attached to the old doctrines, is a bad reason for demanding ••
the abolition of the new, and a still worse rea^m for refusing to
take notice of the new. If Mr. Dibblee couid have his way, and
abolish the old orthodoxy root-and-branch, would business men
cease to talk the old language? The tmth is they would talk the
old language whatever the new might be. One is almost sur-
prised in face of this to find Mr. Dibblee throw in his lot with
the practical men in their controversy wi|h the economists. For
it is the practical men, and not the economists, ^vho still mutter
the old formuhio which are the principal objects of his ire. In
particular, the remark of th».. New York lawyer, wdth which the
book opens, that the tariff could have no influence on prices,
because they were regiflated by supply and deman<^^ is an

1913] DIBBLEE : THE LAWS SUPPLY AND DEMAND

absurdity to which no economist who has ever existed could have
given utterance. ^

It is not quite clear for what audience this book is intended.
It is true that we are told, “It was not for economists that this
discussion was primarily undertaken. It is rather to be described
as a practical investigation of principles underlying the habits of
business men.*’ feut there is no inconsistency between these two
aims. The economist may weP be grateful for the acute analysis
of the habits of business men which Mr. Dibblee provides. And
it is difficult to see how he can llhpo to obtain readers outside
the ranks ol economists. In spite of the rejuidiation in the passage
quoted earlier of “scientit-c ’ or “controversial” inte?ition, the
book is essentially controve’^sial. starting point of each

aigument is the critirisia of some economic doctrinr^s treated
frequently in an allusive way. When he leaves controversy
behind, tffe %.athor propounds formal theorems with more
elaborateness and precision than lucidity. His difficoilt style and
technical, even mathematical, language are fitted far better for
“scientific” than for the “practical” reader. From the point of
view of “exposition” it would be difficult to imagine a worse
book.

But it is a book, which is well worth the consideration of those
econo^nists wffio have the patience for winnowing the wheat from
a plentiful adfhixture of chafi', and can supjiress their irritation
at the unfairness of many of the^ writer’s attacks ujiGn them.
For Mr, Dibblee fails altogether to understand the i^oint of view
of the ordinary economist. He himself quite frankly deals with
the problems as they present themselves to the business man ;
. and along this lin^ he contributes many valuable suggestions.
But the" haste in drawing conclusions, and the proneness to
exaggerate the importance of the# points on which he fastens,
qualities which are the inevitable counterpart of tlic ins]>iring
zest with which he throws himself into his task, and the freshness
and independence of his treatment, lead him to forget that there
is another *point of view from which economic problems can
profitably be studied. The point of view of the State or society,
which economists for the most part adopt, is in several ways
different from that of the business man. For one thing, it in-
volves a longer period of time ; and it is over the question of time
that Mr. DibFIfee comes most conspicuously to grief. He fails
entirely to appreciate the conception of the “long run,” a phrase
for which he has the most absolute contempt. Economists will
be surprised to learn that this phrase arose out of a kindly, but

78 THE ECONOli^C JOUENAL [MABCH

mistaken, “theory of perfectibility,” that ii was originated by
men “who believed passionately* in a possible ^tate of perfection
in the material world, in the power of miinkind to recognise it,
and in a natural inclination to move in that direction.” This
inability to understand “the long run,” and its attendant assump-
tion, “other things being equal/’ runs throughout the whole book
and vitiates many of the author’s most triumphant pieces of
reasoning. It leads him to make an attack on the symmetorical
treatment of supply and demand, and the principal laws relating
to them, under a misapprehension of their nature. While h^
imagines himself to be overthrowing the ordinary theories of
long-period value, he is in reality rpi^-king a contribution to the
study of short-period value.

His contribution, so regarded, is a very useful one^ and bis
analysis throughout is singularly penetrating and acute. Of
especial interest is his treatment of “aist of pr .eduction/’ an
“unilluminating” pjirase which he holds responsible for much
error and misunderstanding. In his view, “it costs more to scT
most articles than to make them ” : a proposition which is
certainly worth examination, supported as it is by interesting
evidence and estimates. “ Productive power has outstripped
desire,” and it is “selling” which is the chief difficulty for society
to-day as for the man of business.

“The productive power of modern industry is so tremendous
that a comparatively small aipount of capital laid down in some
dozen suitable^ English, German, and Ariiericau towns with a
well-trained industrial population, will be able to produce most
kinds of goods capable of indefinite multiplication euflficient for
the whole world.” ‘

Our industrial system has two devices for dealing with this
embarrassing product, the control of supply and the manipulation
of demand. The ccrntrol of supply includes not^merel}^ the recog-
nised and valuable function of adjustn^ent between different
places and different periods of time, but, in addition, a permanent
“holding back.” “If we open the sluices of modern productive
resources developed under the factory system in the last seventy
years, goods pour out at an amazingly cheap, and ever cheaper
rate, and the market is flooded beyond |iny possibility of com-
mercial remuneration.” The duty of the seller, accordingly, “is
one of holding back the immense output of mo'Hern production
and allowing it to filter slowly through their bands.” ]t does not
occur to Mr. Dibblee that this can hardly be a very valuable
service for the social point of view. 4kHis confusion wherever the

1913 ] DIBBJiEE : THE LAWS U>P STJ-PPLY AND DEMAND

element of time enters in pievents him from distinguishing
clearly between, a beneficial “holdihg back’* to meet and to avert
fluctuations, and a “holding back” of this permanent and
statical nature which is plainly wasteful. . A similar uncertainty
of conclusion marks his treatment of the “manipulation of-
demand.” We we told that “misrepresentation has become a
chief part of the advertiser’s stock-in-t^ade,” that “nearly all
trade is, from a psychological necessity, dependent on a habit of
misrepresentation which is both aljsurd and dangerous,” and the
talents required for a successful seller are approvingly illustrated
by the remark of a man who bad made a large fortune : “Borne
people think me not very bright, and 1 cannot make a good
speech nor tell a good story ; but 1 can sell a man a bad picture
V^hich be doesn’t want.” A Socialist could not desire a more
trenchant ^yjxisurc of the wastes involved in our present cora^
mercial system ; and it is somewhat surprising to find Mr. Dibblee
after this analysis deducing from the very magnitude of the part
played by “the manipulation of demtind” and “the control of
supply ” an additional argument against State Socialism. ‘ The
State, he tells us, is a bad seller, and unfitted for the difficult
task of “holding back supply” ; but one who follows his ruthless
description of these processes may reasonably wonder whether
their p^rformajpee is on the balance socially desirable.

But the value of Mr. Dibblee’s book does not lie so much in
his main arguments, as in the ideafe which he continually throws
out by the way. “ Suggestive “ is the epithet which can most pro-
perly be used to describe his work. He pours forth a stream of
shrewd observations upon every kind of topic, casual labour,
women’s wages, and the like, which invariably interest and
stimulate even when they do mot carry conviction ; his psyebo-
logiCjal analyses are particularly acute. In addition, he brings to
his task a vivid imagination, <x useful descriptive power, and a
happy knack of illuminating a difficult point by some apt illustra-
tion or telling phrase.

What, for instance, could be better than the following illustra-
tion of the relations between local markets and the larger ones
in which they are embraced? “We must imagine the small
markets as being centres of extreme fluidity in an encompassing
medium of lessqj: but partial fluidity, so that local agitations can
affect the slower-moving enveloping medium, and carry inter-
mediate vibrations to other local centres.”

Or, in another vein, what could better hit off the Anti-Trust
legislation in the United States, with its uncertain principles and

THE ECONOMfC JOURNAL ^ [MARCH

vague phrases about combinatioji “in restraint of trade,” than
the remark that it is an attempt “to endiulate the legislation' of
the White King in Alice in Wonderland when h^ wrote : Rule I.
' All persons more than a mile high to leave the court ’ ” ?

Or, again, what neater definition of “necessaries” could be
given than : “we are accustomed to call those objects the
* necessaries of life ’ where our habits permit very little choice in
selection ” ?

These are merely instances of the fresh ideas and apt remarks
which are scattered on every other page, and serve to enliven
frequent tedious wastes of muddled reasoning, and misunder-
standing.

H. D. Henderson

The Constitution and Finance of English, Scoitv<h, and Irish
Joint-Stock Companies to 1720. By W. It. Scott, Litt.D.
(Cambridge: University Press. 1912. Vol. 1. Pp. Ivi-h
488.)

We have now the whole of Dr. Scott's book, of which tlie
second and third volumes were reviewed here in March and
September, 1911. This volume contains thd genei'a! history of
the joint-stock : its predecessors gave us tlie individual histories
of all the companies. The three form a work of which British
historical scholarship may b5 proud. Some thirty distinct MS.
collections have been consulted- —counting the Museum and the
Record Ofiice each only as one ; there is a general bibliography of
about five hundred works, and a pamphlet bibliography almost
as long, not to mention bibliographies of official publications and^
newspapers. It is no exaggeration to say that dozens of books,
each embodying a serious piece of historical research, could have
been carved out of Dr. Scott’s materials. ^

The method adopted in this volume, as ^oreshad^)W*ed in a
remarkable appendix to Vol. 111., is the study of joint-stock com-
pany financial history in close connection with national financial
history. This raises a number of difficult problems in selection
and arrangement. At times one is tempted to think that sections
of the general history are not sufficiently relevant to the matter
of joint-stock to justify the very full treatment which they receive ;
at others one wonders on what principle certain aspects of
financial or general economic history have been omitted. But
the method itself is fully justified. From the beginning, when
the Russia Company shipped naval stores from the White Sea, the

1913] SOOTT : JOINT-STOC? COMPANIES TO 1720 81

Mines Eoyal sought calamine stone” for gun-metal, and the
Mineral and Battery Works rhade the guns ; down through the age
of the joint-stock privateering syndicates that “singed the beard
of the King of Spain ” ; through the history of the East
India Company that struggled with the Dutch, and the Hudson
Bay Company tl^at got parliamentary panction because it was a
thorn driven into the side of the French ; through the monopolies
controversy and the I^and Bauk controversy, where politics so
often decided economic*, judgments, away to the struggle between
the two East India Companies *.nd*the greater struggle between
the South Sea Company and fch^* Bank for the profit of l^earing
the National Debt : thiougb all this, and much more, the fortunes
of the chief companies are hound up with the fortunes of the
St^.te. And from time i>o time the Stale made use of their capital
or their creUi , from the day when Elizabeth took long credit
from the Comnany to the tinal politico-economic adventure

of government with the South Sea dire(*,tors. ,

^ It is for Ihc reign of Elizabeth that Dr. Scott’s method is
perhaps most instructive to the general historian. The Queen
lends men of war to the Africa Company and takes shares in the
raiding syndicates, partly to get profit, partly to get i)olitical
control. The full study of her official and unofficial finance
explai’^'s each stage and turn of her notorious parsimony, and
justifies* it. Eight through the book the general historian is
fortified or corrected by the less teghnical results of Dr. Scott’s
financial research. It is perhai)s not difficult to correct the finance
of Froude [p. 81 n.] ; but Gardiner, who is also corrected more
than once [c.(7., p. 245], is nobler game. The noblest of all is
^dam Smith. With him we get on to luore technical ground.
Very little, indeed, of his" generalisations about joint-stock
survives some dozen pages of Dr. Scott’s criticism. Some of the
}X)irft8, as the critic puts them, deserve to be summarised.

Firstly, Smith* absorbed what Dr. Scott holds to have been
a mere .eighteenth-century prejudice against the joint-stock
system itself — “fhe pernicious art of stock -jobbing “-—based upon
a distorted memory of the period 1695-1720. The South Sea
directors were corrupt enough ; but had they been never so pure
their faith in the virtue^ of a “fund of cr<?.dit,” which almost all
their contemporaries shared, and w^hich had no necessary con-
nection with “stack-jobbing,” was bound to lead to a crash sooner
or later. “The Fire Insurance Company, the Bank of England,
and the Million Bank all carried on business without any working
capital provided by the members ” [p. 344] , and the South Sea

No. 89.— VOL. XXIII

82 THE EOONOlSflC JOUKNAL [MABCH

did the same, only on a larger scale* Corruption was not specially
characteristic of the companies of the later seventeenth and early
eighteenth centuries [pp. 451, 463]. The main cause of the
crisis of 1696”7 was not “ stock- jobbing ** [p. 357] : the stock-
jobber was the scapegoat. The companies of that time were not
all “bubbles’* — that is, fraudulent or irrational schemes — any
more than were the companies of 1720.

Starting with a prejudice against joint-stock and a know-
ledge derived mainly from Anderson, Smith picked out — some-
times, according to Dr. Scot^ [p. 450], invented — for animadver-
sion unsuccessful periods in the history of such concerns as the
East India Company and the Africa Company, and omitted
successful and creditable episodes. That joint-stock foreign
trading companies could not hold their own against private adven-
turers, as Smith maintained, is not true of the period under
review; the few successful interlopers were usuahy themselves
small joint-stock concerns. The famous dictum that joint-stock
— apart from monopoly — is only likely to succeed in routme
businesses is also challenged. The Bank of England had no
monopoly against private bankers and its early days w’ere
“purely experimental.” The early water companies had not
complete monopoly and were highly experimental. “The capital
of companies was used in the main for ventures which were either
altogether new trades or revived industries, or those proix)sed'to
be conducted by new metho^ds ; or again, in cases where there
was an exceptional degree of risk” [p. 461]. Many succeeded,
but not by routine.

Naturally, Dr. Rcott is able to correct historians of commercial
crises — like Juglar and Marx Wirth --who have not his first-hand^
knowledge. [See pp. 390, 464, 468.] In his refeiences to Jevons
and the sun-spots, however, he takes no account of the recent work
of Jevons’ son. He can easily traverse a confident dicturii of
Sornbart that the really transferable share only came injo exist-
ence in the eighteenth century. As early as 1568, “jjeicester
had directed a share should be sold, just as a modern stock-
holder gives an order to his broker” [p. 443, and Vol. II., p.
416 n.J, and there was abundance of sale in the seventeenth
century. True, new shareholders in the East India Company had
to pay a heavy sum for their “freedom^’ in the early days, just
as in regulated companies [p. 152] ; and this made shares imper-
fectly negotiable. But after 1624 the fine was so much reduced
that, “on any considerable purchase,” it was no more than a
moderate registration fee. Ultimately it was abolished. In any

1913] SCOTT: joint-stockOoomp'NIES to 1720 88

case, the fully developed stock-cealing of the last decade of the
seventeenth century, with Houghton’s price-lists and his nick-
names for companies wilh long -winded titles [p. 329], obviously
presupposes a good many years of perfectly negotiable securities.

Dr. Scott deals rather briefly in his first chapter with “the
various lines of economic development which converge in the first
English joint-stock companies,’* but he savj all that need be said.
Without losing himself in the antiquities of the commeuda, the
societas, and the Bank of St. George, he points out the scanty
evidence for direct influence from the continent in the early
sixteenth cencury. After r^‘'‘(*ing his earlier volumes, especially
the history of the Germar speculators in the Mines Ro3"al, one
had wondered what weight he would assign to the transfsrable
shares in German mining enterprises that were well-known in
the fifteenth^.! tury. He does not develop the point, though he
refers to it. No doubt he is right to follow in the main more
obvious lines of growth. All the machinery W government and
th8 corporate life are to be found in tho later guilds or in the
Merchant Adventurers. When the Merchant Guild of Dublin in
1452 ap^xiints buyers and then shares out their purchases among
the members, or when the Newcastle Adventurers, in 1599, also
make a corporate purchase, w^e are brought very near to joint-
stock ac4on. “When such bargains became the rule . . . the
regulated company would be turned into a joint-stock company ”
[p. 12] . Moreover, the early joint-stodlc conifianies often paid divi-
dends in goods, a further link with the older corporspte purchases
and sharings ; while freemen of the Newcastle Merchant Adven-
turers, at any rate, “^in small bodies entered into partnership”
[p. 11] . Given a permanent partnership of all the members in a
fairly small society, such as were the earlier joint-stock enterprises,
and the transformation is complete. ‘^The Russia Company came
into existence with^a complete internal organisation, which in
tHe main* was transferred from the previously existing type of
corporation.* No provision was made in the charter for any of
the functions that would arise out of this company being formed
on a joint-stock basis” [p. 2l].

The growth of “joint-stock characteristics” can be traced
gradually over a period of S century and a half. In the sixteenth
century, and far dqwm the seventeenth, the “share” was a fixed
fraction of the enterprise, varying in monetary amount as the
business varied; not, as to-day, a thing with a fixed denomina-
tion, of which less or more may be issued according to the business
situation [pp. 44-5]. Hence the difiiculty of getting calls paid

• * g2

84 THK KCONOAtiC JOURNAL [MARCH

up, for the shareholder never knftw his maximum liability. Hence ^
also the subdivision of shares into “halves, quarters, and even
eighths,” in the Mines Eoyal as early as 1571 [p. 45]. A little
later we do, no doubt, get the Frobisher expeditions, in connection
with which it was resolved that £100 was to be reckoned “one
single part or share in stok of the company ” ; but Dr. Scott only
places the landmark which indicates the beginning of the modern
conception of a share at “the doubling of the capital, reckoned
as paid up, by the East Indica Company in 1682” [p. 304]. “As
long as the capital was divided into ‘ portions,’ or shares, any
appreciation of the property was reflected mainly in the divi-
dend ” ; the “watering” of 1682 involves a new conception.

Subsidiary companies, which seem so very modern, appear
already in the Mineral and Battery Works in 1571 [pp. 58-9. See
also Vol. II.]. The term director first ai)pears inj' charter, that
of the Africa Company, in J618 ; but the concern had at its head,
like the older regulated companies, a Governor and a Deputy-
Governor. The twelve directors were the Governor’s Council
[p. 151]. The first traces of limited liability occur in the Fishery
Society in 1634. There had been a deficit and it was resolved
that capital subscribed from that time forward should be exempt
from liability for this deficit [p. 228]. Then, in 1662, limitations
of liability are granted to the East India, Africa, and Poyal
Fishery Companies by Act of Parliament [p. 270]. Adam Smith,
by the way, was wrong in supposing that all chartered under-
takings enjoyed this privilege [p. 447].

At the time when it doubled its nominal capital the East India
Company had for many years indulged in borrowings, which Dr.
Scott calls “a species of striving towards the modern debenture^ ”
[p. 304]. Indeed, companies had borrowed on registered bonds
from a very early date. By the end of the seventeenth ce^ntury
we have bonds of a different sort, “which wen? in effect preference
shares,” in the Mine Adventurers’ Company [p. 365].*

The problems in ca)nomic history, other tharw those strictly
connected with joint-stock, on which Dr. Scott throws fresh light,
or in relation to which his opinion merits careful consideration,
are almost innumerable. There is the* account of FUizabeth’s
maximum interest law, which financial difficulties forced her to
break in proprid persond, jast as Charles II. broke the law a
century later. There is an interesting calculation by which we
can determine the average cost of certain Elizabethan naval ex-
peditions per ton or per man, and so can estimate the capital
employed in cases where we have no precise financial statistics

1913] TAWNET : AGKARIAN PBOTJ’jEM tn SIXTEENTH CENTURY 85

[p. 77]. The monopolies agitations under Elizabeth, James, and
Charles are fully discussed. Parliament comes rather badly out
of these discussions; as do the “Free Traders “ and ostensibly
disinterested interlopers of -the seventeenth century out of a long
series of references. Almost invariably the agitator against
monopoly in one# sphere seeks monopoly for himself in another ;
possibly even in the sphere of his denunciation. In the matter of
the Navigation Laws, I)r. Scott crmiirms and strengthens Dr.
Cunningham’s adverse verdict ori^their workmg ^o far as the
seventeenth century is concorjjed. So one might go on. The
book is inexhaustible in its wealth of fact. Jt is not, perhaps just
what one would call a v^nrk of art; but though one might easily
carp at this bit of construction or tliat turn of phrase, and though
one might disagree with many obiter dicta in a work which takes
so wide a s -' Oop, it is amazingly ditticult to dissent from the
author's carefM.ily weighed judgments on the essentials. He
knows his ccunpanies as a trained and cautious investor knows the
oincerns in which his Ovvn capital lies On the strength of his
knowledge it seems easy to hx the proper times for buying
Frobishers or selling Battery Works. And he has wrung out that
knowledge from his authorities with a magnificent scholar’s
patience.

J. H. Clapham

The Agrarian Problem in the Sixteenth Century. By R. H.

Tawney. With six maps in colour. (London : Longmans.

1912. Pp. xii + 4fil. 95. net.)

• Here we have *a substantial, most useful, and altogether
notable book ; the work of a man alert, full of ideas, touched wdth
emotion, yet restrained by the scieidtifie conscience. It is dedi-
cated to the president and secrejtary of the Workers’ Educational
‘Associatton, and in his Preface the author tells us he has learnt
much from J‘the friendly smitings of weavers, potters, miners,
and engineers ’’ in the classes he has conducted in connection with
that body during the last lour years. TVobably, if he had had
nothing to do with “the W.E.A.,” Mr. Tawney would have
written a book very mudi like this. Rut I think we can discern
now in his work an intensity of sympathy with “the under dog,”
and at the same time a seiis6 of the limitations of class-outlook
such as only intimate intercourse wu'th w'orkp(‘ople could have given
him. If in any degree this book can be called an outcome of
the W.E.A,, then for the scholar, at any rate, the W.E.A« is

THE ECONOMIC JOURNAL

[march

beginning to be justified by its fruit. And this is a welcome
conclusion. No one who has watched the W.E.A. closely can fail
to have suspected one grave danger : the danger lest the lecturer
on economic topics (naturally the most attractive) should be
biassed unconsciously towards j)opular conclusions. I must con-
fess I have felt the temptation myself when addressing working-
class audiences : just as I have felt it, in a different direction,
in addressing audiences of eniployers. One’s points can be made so
much more effectively, the glint of approval can be brought so
much more readily into the eyes of one’s auditors, if one lets one-
self go and omits qualifications ! It is reassuring to be presented
with a book like this, which has come out of a W.E.A. atmo-
sphere, tingling with feeling, it is true, and yet on the whole so
balanced and fair-minded.

In approaching the subject Mr. Tawney has enjoyed advan-
tages not at our disposal, who came to it more than twenty years
ago. To build on We had then little more than Rogers and Nasse,
together with the mediteval Extents and the like in the Rolls arid
Camden scries, on which Seebohm had recently thrown so
powerful a light, a few j)a8sages of More and Latimer, and the
writings of Coke. But since then Vinogradoff has made clear the
legal disabilities of mediawal villcnage ; Maitland, following
Meitzen, has brought out the diversity of local conditions ; '^age
has brought exactitude into our knowledge of Commutation ;
Leadam has published and "Gay has worked over the Enclosure
returns; and*, most effective perhaps of all, Savine has revealed
the proceedings of the courts in the matter of copyhold and cus-
tomary tenure. And, by the way, our author does not, perhaps,
use quite the right word when he speaks of a writer of 1892 as
“overlooking” these law' cases, as if he might have been expected
to know about them. He wohld reply, as Dr. Johnson did when he
was asked how he ciiiue to majce a mistake^ in his Dictionary :
“Ignorance, sir ; pure ignorance ! ” But then e\erybody else was
equally ignorant in 1892. Mr. Leadam, it is true, called attention
in that very year to the sixteenth-century Common Law cases ;
but his interpretation of them was dpen to grave objection, and
has, in fact, been subsequently dis];x)sed of by Mr. Savine. It
was the articles of the latter scholar in 4902 and 1904 which first
put the matter in the right jierspective by bringing out the signi-
ficance of the earlier Chancery proceedings ; and these were only
made available to him by the then recent publication of the
Calendar. No sensible man who kept his eyes open could write
just in the same way after 1904 as was natural enough before.

1913] TAWNBT : AGBABUN PBOBr.EM IN SIXTEENTH CENTTJKT 87

^ ,

Whatever hia advantages, Mji. Tawney has made good use of
them. He has immersed himself in the literature of the subject ;
he has utilised the fresh material printed in the Victoria County
histories ; he has himself collected a large number of transcripts
from the Record Office, and has subjected them to a painstaking
statistical analysis. The result is a work which, for the first time,
covers the whole field. It is all run into an argumentative mould,
so that no one can go to sleep )ver it ; it is enlivened by forcibly-
expressed generalisations, and by ^patches of rhetoric w^armly
purple ; but at the end one has feeling that the object has been
attained : we feel that we now leally know^ the agricultural life
of the sixtt'enth century in us fulness and complexity.

To go through all tne main topics of Mr. Tawney’s book,
desirable as it would be, is more than can be undertaken on the
present occaSi'm. I must content myself with mentioning what
seem to me his chief personal contributions to the story. The
first is his accciunt of the way in which, in the Midlands and the
Sbuth, the old symmetry of the yardlands had already, long before
the Enclosures, been broken in upon by exchanges and purchases
among the customary tenants. Another is the evidence he adduces
of the grant both of pieces of the waste and, still more significant,
of pieces of the deiliesne to customary tenants : facts which have
noJit Je bearing on the legal character and economic effect of the
subsequent enclosures. A third is the firoof of the conservatism
of Northumberlo.nd, and its explanation in the military import-
ance of the tenantry ; to which, as Mr. Tawney acutely points out,
the military motives for preserving the peasantry which actuated
the Tudor Government are closely analogous, on a larger scale.
And coming to the* results of the enclosures, a point novel, I
think, to modern discussion is made by Mr. Tawney when he
calls attention to the crowding <5f workless cotters into the
remaining “open fielden towns.” Especially interesting, too, is
Mr. TaVney’s treatment of the question oi the effect of govern-
mental intervention by means of legislation, commissions, and
such prerogative tribunals as the Star Chamber and the Court of
Requests. With his conclusion that this intervention “mitigated
the hardships of the movement to the rural classes,” and “imposed
a brake which somewhat eased the shock,” he gives us good reason
for acquiescing : I should be inclined myself to venture further,
and to say that while governmental intervention did not prevent
a good deal of enclosure from taking place, there would hav^e been
very much more enclosure had there been no intervention. I am
glad to see, also, that Mr. Tawney recognises some merit in the

88 THE BCONOIk|IC JOUBNAL [MARCH

Stuart “ideal of government by pixerogative.” Perhaps in time he
may think even more kindly than he does at present of the Stuart
Council. His present opinions are on the side of the seventeenth-
century squirearchy politically and against them socially. Not
infrequently, I have noticed, the Whig “infection doth remain
yea, in them that are,” like Mr. Tawney (economically),
“regenerated.”

I have noted down a number of dubitanda which need not
be dealt with here at any lei\gth, but which the author may care
to consider for his second edition. P. 7, n. 2 : “Hales was quite
conversant with the effect on general prices of an increase in the
supply of money.” Did Hales get beyond the effect of debase-
ment? Was not the idea of the result of simple increase intro-
duced into his treatise in 1581 by W. S.? (See ed. Lamond,
pp. xxxiii, 185, 187.) P. 126 : is it quite certain that the rules
as to succession in High Furness were really the wwk of “the
whole village” — “the prudent men of High Furness”? “It is
now ordered ” sounds remarkably like a royal ordinance or regulHT-
tion, especially when we notice the motive recited at the head of
the document. P. ]66 : surely the explanation suggested for what
is justly called “the strange statement of Hales” — viz., that the
chief destruction of towns (i.c,, villages) w as •before the reign of
Henry VII. — that this “may well have been a curt summary of
the impression produced by a century of gradual consolidation and
piecemeal enclosures carried ‘-out by the smaller cultivators,” is,
on the face of it, very improbahh*. P. 258 : does the narrative
here quoted refer to any but freeholders? the text says nothing
about “other tenants.” P. 809: “the flooding of Europe with
American silver” has, hitherto, been commonly supposed not to
have affected prices in England till some time after the discovery
of the Potosi mines in 1546*— according to Adam Smith not till
about 1570. P. 381 : for further corroboration of “the view that
the religious houses had been easier landlords than thci new lay
owners,” reference may be made to the author's own citation from
Becon, p. 7, n. 1 ; to the fears expressed by Starkey {England in
the Reign oj Henry VlII,, p. Iviii, 5eq.); to the last clause but
one of the great act of secularisation, 1536 ; and to the complaint
by Hales in 1548 as to its non-obse#vance (Common Weal,
p. xlix-1). A convenient catena of passages from contemporary
writers will be found in I’rofessor Cheyney’s book. That the
religious houses w^ere “easier” is nol to be attributed to their
religious character, but to* the conservatism of all corporations.
Mr. Tawney's comparison with “fellows of Oxford colleges”

1913) MOULTON : WATBEW4TS VERSUS BAILWAT^S 89

(p. 383) tells in the same direction ; for colleges were notoriously
conservative, even in the nineteenth cen^urj, in the management
of their estates.

W. J. Ashley

Waterways versus Railways. By Harold G. Moulton,
Instructor in Political Economy in the' University of Chicago.
(Boston and New York : Houghton Mifflin Company. 1912.
Pp. 468. Price $2.) *

The Lakes 40’the-Gulf Dc'i) Waterway. By Willi ym A.
Shelton, Graduate rnudent in Political Economy in the
University of ^'Uiic^i.go. (The University of Chicago Press,
Chicago, Illinois. 1912. I^p. 130.)

Mr. Moi lton’s book is very interesting throughout. But
the most interesting parts of it ave the pioface and the conclusion.
In the preface he describes the attitude of *tiis mind as it was
^hen he began his study, and the ebange of opinion that was
forced upon him as he became more and more familiar with the
facts. In his last chapter he deals with what may be called
the psychology of the waterway movement, and explains the
causes w'hich in his view account for the fact that the arguments
whjeli have convinced him have so far not convinced the man
in the street.

Here is what the preface says! —

“When this investigation was undertaken, the^author shared
in the common belief that traffic of certain kinds can be carried
at substantially less^cost by water than by rail. ... A reading
of the literature of the subject, however, soon made it evident
that no adequate analysis of the cost of transportation by water
had ever been made; that it was^merely tacitly assumed that
wafer transportation is cheaper than that by rail ; and that the
rate comparisons sometimes presented in support of this assump-
tion were .virtually meaningless. This discovery led to a
shifting of emphasis to the cost a.sf)ect of the problem, the question
of traffic assuming a secondary place. . . . When the author
went to Europe he shared in the general belief that water trans-
portation on the Contine?it w^as of undoubted economic advantage.
. . . But to the surprise of the author it soon became apparent
that in Europe, as in the United States, little consideration had
ever been given to the inclusive cost of transport by water as
compared with that by rail, and that the rate comparisons
usually made proved nothing whatsoever. “

90 THE ECONOMIC JOURNAL [MARCH

Mr. Moulton’s very careful aird acute investigations of canals
both in esse and in posse in the United States, and in all the
principal countries of Europe, which led him to the change of
view he has so frankly recorded in the preface, occupy the bulk of
the book before us. They show in elaborately particularised
and closely localised detail what not a few authorities on the
subject, such as Colson in Prance, and Ulrich in Germany, have
long ago asserted as a general proposition — that, in Mr. Moulton’s
own words, “there can no longer be any question that, so far
at least as canals are concerned, the cost of transportation, all
factors included, is almost universally much greater by water
than b}^ rail. ... All attempts to make canals an integral part
of a national transportation system, w^hether for the carriage of
high class or low grade freight it matters not, is an attempt to
turn backwards the clock of time. In the case of rivers, how-
ever, the situation inay at times be somewhat different; . . . but
it is only in rare instances that river trans{X)rtation can be made
as economical as transportation by rail.”

Mr. Moulton’s case, wdiich in the o[)inion of the present
writer is absolutely conclusive, rests, of course, in the main on
the fact that the ordinary estimates of transportation costs by
rail and by canal include, in the case of the railw^ay, all costs;
in the case of the canal, only sucii ousts (in France about one-half
of the whole) as are borne by the trader himself. It is difficult
to understand bow so one-sided a basis of comparison can ever
have been suffered to pass unchallenged. But apparently it has
been so common as to be taken for granted. One striking
instance nearer home than the United States may perhaps be
given. Our own recent Eo3^al Commission on Canals sat for
several years, and published eleven volumes, and a Eeport con-
taining 974 paragiaphs. Not one of the 974 paragraphs discusses
the question, which to an ordinary economist wuuld surely have
seemed fundamental, whether there are any,*' and, if so, what
circumstances in which canals are a more economic means of
transport than railways. Nor does the Eeport so much as allude
to the very pertinent fact disclosed tn the Eeport of their Sub-
Commissioner, Mr. Lindley, that, whereas the total cost per
ton kilometre on the railways of France^ for all traffic, high class
and low class, small and large consignments, is 0‘55d., the total
cost on the w^aterw^ays, for low-class bulk traffic only, is 0*57d.
As, however, it also appears that only one-half of the canal cost
is paid by the trader, while the other half is thrown on the
shoulders of the taxpayer, it is easy to understand how the trader

1913] MOULTON : WATEBWAYS VERSUS RAILWAYS 9l

comes to assert that canal carriage is cheaper. Why, however,
a Eoyal Commission should take the truth of his statement for
granted is not so clear.

The bulk of Mr. Moulton’s book consists, b^B has been said,
of a description and appreciation of the existing waterways and
the schemes for new waterways in th^' principal countries in the
world. Each individual waterway, how^ever, has, generally
speaking, no Interest excep' for those whom it particularly
concerns, and the cumulative effect of the argument is only
reached as Mr. Moulton shows to us one waterway after another,
points to ihe traffic it carrier^, and the total cost of carriage, and
proves that in almost e/ery case ^the Rhine is the one con*
spicuous exception'^ the dnal balance is, not a profit, but a deficit.
There is, therefore, nothing to be gamed by an attempt to make
a summary ^/t a review. Two interesting points may, however,
be noted in inference to Germany.

The first is that the otficial Prussian policy forces a very
4arge and rapidly growing traffic in cool and iron in the Ruhr
district on tc. the waterways ; and that new^ w aterways are being
constructed to deal with this growing traffic, wiiich, it is alleged,
the railways are unable to cope with. Mr. Moulton points out,
not only that raiK\'ays both' in England and America have no
difficulty in dealing with much heavier traffic, but that prac-
tically ^he whole of the Ruhr traffic either originates or terminates
on the railways of the district. N»w, says he — and it is difficult
to see an answer to the objectiem — if railways ca» deal wdth the
traffic at the focus of congestion, a fortiori they can deal with it
nearer the circumference, more especially as the present policy
keeps both the loading and the unloading wdthin the congested
area, whereas, if the railways were allowed to carry the traffic
throughout, either the loading or ihe unloading w^ould normally
tafte 2 )lace outside it.

Tho second 2 ) 6 int is this. Mr. Moulton asks if it is possible
that “the German waterway officials and the German people
in general *can themselves be unaware of the economic losses
involved in waterway expenditure. Is there something back of
the scenes, some iiolitical interest, or some dominating force,
which virtually compete the Government to continue the policy
of subsidising the waterways, or are the German people simply
in the dark as to the economic waste involved?**

He notes that German railway officials regretted at the
International Railway Congress at Berne in 1910 their in-
ability to take part in the discussion of the question wdiether

92 THE ECONOMIC JOURNAL . [MARCH

railways should be sufficiently qpctended to meet the increasing
demands of commerce ; that high officers of the Prussian railways
have, declared the official statement of the Prussian Government
that waterway extension was required to cope with traffic for
which the railways must be inadequate to have been made without
their being consulted : and that twenty high dignitaries who voted
in 1899 in the Prussian House of Lords against the ambitious
Rhine-Weser Canal scheme were summarily removed from their
posts. And he comes to th^^ conclusion, which is, be it said,
undoubtedly correct, that waterw’ay schemes are being pushed
forward in Prussia, not because they are econoniically sound,
but because the German Emperor believes in them. If we may
vary a famous saying of another Emperor five centuries earlier,
Ego sum irnpcrafor Gcrmanivus ei supra econorniam.

To Englishmen, the chapter on the Manchester Ship Canal
has a more direct interest, es[)ecially as most people believe that
the results have justified its construction. Mr. Moulton shows
that the Canal was estimated to cost TS, 000, 000. It has co?'.
more than double. It 'was estimated to pay a 5 per cent,
dividend upon the whole share capital of £8,000,000 in the
second year of operation. .In fact, now, sixteen years after its
opening, it has never even met the interc*.st on its debt. It was
estimated to earn in the second year of operation £479,000 net.
In fact, it earned £ 107,000 gross Further, as to its Indirect
effects : Manchester shows growth of population during the
decade 1 891-1901 l(‘ss than that of Liverpool and Birmingham,
and not half that of Leeds: the reduction in railway rates
between Liverpool and Manchester is ‘‘slight at best.” One
might perhaps add that, had the £17,0(X),CX)0 been spent, not
on making a canal, but as a free gift to the Lancashire railway
companies, tliere can be no doubt that they would have agreed
in return to carry cotton for nothing, and to give to manufac-
turers and operatives alike perpetual free passes betw^een
Manchester and the pleasure towns of the Ijancashire coast.

One criticism should, I think, be made of Mr. Moulton’s
otherwise excellent work. In referring to railways, he does not
seem to be on as sure ground as in dealing with canals. More
than once he appears to compare sorfie [)articular canal in
reference to construction cost, actual traffic, or traffic capacity,
not with its real analogue, some specific main line, but with
some railway system as a whole.

A word as to Mr. Moulton’s psychology of w^aterway sup-
porters. He believes that the popular mind still retains a

1913] MOULTON : waterways versus railways , 93

recollection of the way canalrf opened up new highw^ays of
commerce, and still hopes that the} will once again come to
their own, and with their individualistic methods, deliver,,, us
from the desfK)tism of those ,?reat capitalistic* monopolies the
railw^ays. This substratum of popular sentiment two classes
combine for theif own ends to convert into a definite conviction!
The first class consists of the politicians, s^unetimes merely
because they desire to head a ];x)}>iilaf movement, but often
because they have a personal “axr* to grind/’ The waterways
agitation in Illinois, he says, 'has disgraced the very name of
the State. Unless the whole question of vv*aterways is placed
in the hands of impartial investigating bodies, . . . the country
will waste millions in projects, the general result of which will
be to enlarge the paironage, or further line the pochets of our
practical pohiiciarci.’ The second class consists naturally of the
traders actua’ly situated on 'vaterways who hope to gain a
differential advantage over less conveniently situated rivals. ,
**^vVhen the Sta.te of New York voted by plebiscite on the enlarge-
ment of the Firie Canal in the non-canal Counties voted

against it by large majorities, for instance, 12 to 1, and 10 to 1 ;
but the non-canal Counties were overwhelmed by the vote of
the two terminal 'cities, l^ufl'alo and New York.^

• «

Of Mr, Shelton’s monograph, which was, he says, prepared
as a Master’s thesis at the University of Chicago, and is a study
of the traffic probleun only, little need be said,. It is a most
careful piece of work, and should be of great value locally as a
contribution to the study of the onie definite project with which
it deals, a canal* to connect Chicago with the Mississippi.
Her(? are figures more eloquent than any words. In forty years
tl^e total river tonnage dealt vviMi at St. Louis, the junction
of the Mississippi and the Missouri, has fallen from 1,600,000
tons to 191,000 ^ons. In the same period the rail tonnage has
grown from 3,258,000 tons to 51,700,000. And the Mississippi

^ The present writer happened to be in New York when this vote was taken, and
was assured that the officials of the New York Central Railroad had all voted for it,
the reason being that they were satisfied that, while the Cancal during construction
could bring them a good deHl of traffic, the Oanal when constructed would never
subtract any.

Figures as to the existing Erie Canal have been recently published by ihe Bureau
of Railway Economics (Bulletin No. 21). — In 1909 the actual cost of transportation
paid by the trader was 2 mills per ton mile. But each ton carried one miio cost the
taxpayer in ad.dition 6 *06 mills for capital, and 1*55 mills for maintenance. The
total cost per ton mile was therefore 8*61 mills. The total charge made by the
competing railway companies per ton-mile ranged between G*1 mills and 7*4 mills.

94 THE ECONOMIC JOUBNAL [MABCH

has a miaimtiin 8 ft. channel jfill the way from St. Louis to
New Orleans; while both that river and the Missouri are
navigable for many hundreds of miles above thoir junction. If
such has been the fate of the Father of Waters in competition
with a modern railroad, it is really hardly worth discussing the
prospect of success of some puny artificial waterway.

W. M. Acwobth

Die Wirtschafilichcn Grundla^en des Modernen Zeitungswesens.
By Or. Max Garr. (Vienna and Leipzig : Franz Deuticke.
1912. Pp. 79. 3 mk.)

Die DeiitscJien Buhnen und ihre Angehbrigen. By Dr. Char-
lotte h^NOEL Reimers. (Leipzig : Duncker k Humblot.
1911. Pp. xix + 772. 15 mk.)

The industrial activities of Germany have become self-con-
scious, and economic inquiries into every sort of enterprise and
almost every kind of occupation ix)ur from the German Press.
The modern newspaper and the theatrical profession are the
subject of two recent investigations. These works differ widely
in scope and purpose, but both concern activities and achieve-
ments which Germany holds in high esteem. For all that con-
cerns letters the German has a veneration unmatched in any
country ; for the stage he cherifeh(‘8 an enthusiasm which it is
almost impossible for us to unclerstand. The Press is but a poor
relation of literature, yet the journalist of Vienna or Berlin is a
person of consequence, whose influence is not limited to the
pulling of strings behind the scenes. The stage may everywhere
be invested with a certain glamour, it no doubt appeals to some-
thing in the youth of every nation. But in German-speaking
countries it has its roots deep dowm in the national life, it meets
some need which is part of the national chara(\ter. The author
of the Deutschen Buhnen claims, not without justification, that
the Germans are the true Theaiervolk. The Latin ‘races only
ask to be amused ; the Puritan susceptibilities of the British remain
apprehensive, even w^here they have ceased to be offended. But
for the German the call of the theatre is, irresistible, and never
fails to meet with an eager, enthusiastic res|)onse. The enquiry
undertaken by Dr. Keiniers throw^s a searching light into many
dark corners, and spares neither criticism nor suggestion. Its
main object is to furnish that theoretic basis which the prudent
German never omits as a preliminary to proposed legislation.

The author of the Gnindlagen des Modernen Zeitungs-

1913] GARR : GRXJNDIiAGBN DBS ZBITUNGSWBSENS

wesens has no special gospel ind no immediate practical end
to serve. The journalist, like other men, must live, but this
volume is not concerned with his general claim or his special
difficulties. Nor are the ideal mission or the true function of
newspapers brought into the discussion. Dr. Garr aims only
at providing a fohndatioii of economic facts and figures to server
for the guidance of, and perhaps for a check upon, such specula-
tion. The facts are not likely to be palatable. The modern news-
paper, with its huge machinery £oi« production and distribution,
its dependence on costly telegraphic and oihei agencies, is essen-
tially u coinmcrcial enterpri-.^. Moreovi i, the major portion
of the cost of production is borne by acivertisements. This
is a posit^^n from hieh nothing can save as, and any attempt
to make thi\ Press independent of coinuuTcial elements is fore-
doomed to faV.arc.

The autlUii- is considerably hampered in bis woiic by the un-
willingness ^>f owners and editors to disclose any facts touching on
Wieir finances. Even the balance sli^'ets of Joint Stock Com-
panies cor^rivo to wrap up their essential features in a mist of
vaguenesjg iihd bbscurity. Two Vienna papers did, indeed, furnish
figuireg' on the understanding that their incognito would be re-
sj’'OTed, but only the social-democratic Vorwliris appeared to
"ha V£, nothing to conceal. A trustworthy authority fixes the capital
required to start a newspaper in a German towm of 150,000 in-
habitants at £10,000. The enter}5rise may eventually yield a
return of 20 to 25 per cent., wuth the attendant risk of complete
financial disaster at any moment. Even these figures, the writer
points out, are smaH compared wdth the £300,000 sunk in the
Tribune, or the £600,000 required to bring a INew^ York daily into
existence. The fame of the sum wdiich Mr. Harmsworth, in his
own picturesque language, “dropped* in two days over the Daily
Mirrar'' has evidently not penetrated to Germany.

The 'advertisements stand to the editorial matter of a Berlin
newspaper ip the proportion of, roughly, 34 : 60 per cent. In
French papers the relation is 27 : 73, but in France the editorial
text is very accessible — to put it politely — to the advertiser. This
dependence on advertise^nent, i.c., the fact that the selling price
of the paper does not meet the cost of production , leads the writer
to the paradoxical c'^i^i^*liision that after a certain point has been
reached any increase in ttie circulation can only be a disadvantage,
and he quotes a bon-rnot of the famous editor, August Zang :

“ Every new subscriber is an enemy.” The ideal circulation would
seem to be the minimum that will satisfy the advertisers, — a

96 ' THE ECONOMIC JOURNAL [MARCH

position which involves an errolieous assumption of rigidity in
the world of advertisement.

It is true that the German newspaper, with its endless supple-
ments, is a very bulky article, costly to produce. A leading Vienna
daily consists of 60 pages on weekdays, 128 pages on Sundays, and
216 on holidays. 70,000 copies make up the daily edition, but on
Sundays and holidays the ampler leisure of the population creates
a demand for 120,000 copies. The profit on a weekday issue
amounts to 6,040 kronen, on t. Sunday edition to 9,269, but on holi-
days it falls to 1 ,652. It is clear that the size and circulation of the
Sunday issue represent the limit of profitable expansion. After
this point has been reached profits sink rapidly, and if all circum-
stances were taken into consideration, might vanish ^^Itogether.
The writer, how^ever, overlooks the fact that the holidf'y number--
it might almost be called the holiday volume— adds to the popu-
larity of the paper, and takes a prominent j>art in the unceasing
w\arfare w^hich every pai)er must wage with its comp "/titors.

On the subject of advertisement agents the wTiter is frankly
pessimistic. The battle is to the strong — and unscrupulous. The
agent makes enormous profits, but his methods do not investi-
gation. The purely commercial character of the f’r(-?h‘S, tTi?ifn^riter
concludes, is injurious to the public welfare. He deplores the fre-
quency wdth wdiich papers change bands, and the conseejuent''
facility with which contributors must needs change view^s. ^he
public in its infrequent philosophic mouKmts complains, but does
not appear to realise its own responsibilities. For the newspaper
only exists to give the public what it w’^ants, and the only hope
for the future lies in the progressive political and educational ad-
vancement of the masses. A State Press would, in the opinion
of Dr. Garr, be a monstrosity, and even a State-subsidised Press
would not be economic-ally 1‘easible. This is a point on w^hich
fuller discussion would have been of great interest, and it is to
be regretted that the writ(‘r states the problenf only to dismiss it.

For the author of the [Jcuischen Buhnen und ihre^Angehorigen
there is no such open question. The stage is for her, as it was
for Joseph II. of Austria, a powerful Instrument for the education
of the public taste and the improvement of public morals. It
follows that the cost cannot be compfited by purely businesl^f
standards. The theatre cannot fulfil its mission without subsidy
from the State or town ; therefore ^liis subsidy must be forth-
coming. The whole volume is a stirring, if somewhat lengthy,
human document. Enquiries were sent to 237 theatres in 182
towns, and each paj>ei contained 140 general and^ 34 ‘'personaF’

1913]

EEIMBBS : DIE DEDTSCHBN DttHNBN

questions. Altogether 2,000 replies were received, and the writer
claims that, with but a few exceptions, all the questions were
answered with evident ca^e, sometimes with passionate eagerness.
As the theatrical calling engages pome 22,000 persons, this material
cannot claim to be exhaustive. But inasmuch as the replies
emanate from e^^ry theatre of any consequence, and embrace
every known grade of employee, every character to be found
in opera, tragedy, comedy or farce, they may fairly be regarded
as representative of the profession. ♦

And the tale -to be gathered i ’ one of t:‘agedy unsurpassed by
any record of sweated industry we .have yet seen. It would
appear that the G-errnan actor is the hurdest w’orked, nxost
poorly paid, and thf most unjustly treated of all mankind. He
is incredibly overtaske^i. Tlie Hiiccession of rehearsal arid per-
formance that 'uake up his working day would tax the strongest
constitution to t)reiikiTig point, ai'd yet these are varied by addi-
tional performances in neighbouring places, which involve night
Jfjarneys and even later hours. Th(; number of plays w^hich a
novice is expected to master is calculated to ruin the most willing
memory, and mar his chances at the outset. The pay compares
unfavourably with the earnings of manual labour. The hygienic
conditions of all but half-a-dozen of the newest theatres are un-
speal^hle. And finally the actor is at the mercy of a contract
which binds him, body and soul, to his employer. Unfavourable
conditions of employment constitute* a hardship in any case, but
everything conspires to make them a special burden, to the actor.
For he is always, in temperament at any rate, an artist, with
unbounded enthusiasm for his calling, with a pathetic eagerness
to work, to succeed, to excel. The nature of his calling imposes
a special tax on every faculty, for the actor can never afford to
relax. Nothing is ever really achieved, for no triumph survives
the night, and success has to be captured afresh in the morning.
In these* circumstances a certain measure of comfort, leisure, and
freedom fronq immediate care w^ould seem essential, but the actor’s
life is nothing but a record of anxiety, privation, and toil.

The reader who has grasped the fact that out of 2,000 Cases
investigated only 404 earn over £100 a year, while over 800
incomes range from £15 to £50, proceeds to read, almost with
"Incredulity, of the expenses involved in the earning of this pittance.
The actor finds his own clothes, — a serious item in the case of
women , who dare not appear in the same frock for two different
parts, and may be called on for a fresh part every two or three

No. 89*— VOL. XXIII.

98 THE ECONOMIC JOURNAL [MARCH

days throughout the season. Lien are provided with historical
costumes when required, but actresses have to provide even these,
and frequently devote to dressmaking the hours that are sadly
needed for rest and sleep. Travelling is another serious item, for
all theatres close for the summer, and the members of the company
are driven to seek summer engagements in watering places, per-
haps halfw^ay across the face of the continent. And lastly, there
is the inevitable middleman, the agent who takes a steady 5 per
cent, of the actor’s salary throughout the whole length of the
engagement he has helped to secure.

But it is, perhaps, the insecurity of tenure which constitutes
the worst grievance in the actor’s life. The Director of a theatre
reserves to himself, by the terms of the contract, a series of
exclusive rights. He may terminate the engagement, where the
contract is for five years, at the end of the first or second year,
where the contract is for one season only, at the end of the first
month. By this tihie all companies are made up, and the victim
of this one-sided form of contract has no chance of another en-
gagement for at least a year, and no option but to starve. Further,
the Director has the right to keep on his company for a few
extra weeks at the end of the season, if he chooses, so that no
member dares to make a new engagement for the weeks succeeding
the term of his contract. The tyranny of the one-sided cr'nlract,'
according to which the employer is never bound, and the employee
never free, is illustrated by numerous instances.

But the \^Titcr points out, in all fairness, that the Director
is in some respects almost as much the victim of circumstances as
his employees. The competition among theatres for the public
favour is as keen as that among actors* and the Director must
at all costs attract to his company anrf keep what “stars ” he can.
The stars make their owm terms, and the salaries w^hich they
command must be saved eisewhei;e. Since the demand for luxury
in the appointments of the theatre and for pertection in technical
detail increases apace, while the price of seats cannot be raised,
the only quarter where savings can be effected is the salary of
the smaller folk. Tliere remains the subsidy, which in the majority
of town theatres lies in the hands of the Theatre Committee of the
municipal authority. The Director is as much at the mercy of
this Committee as the individual actor is at the mercy of his
employer. The Committee interfere in details of management,
may demand the production of certain plays, veto the production
of others, may even insist on the dismissal of a particular actor.
Worse than all this, they may at any moment term^ate the

1913] REIMBBS: DIE DEtJTSCHEN BUHNEN 99

contract with their lessee, on tlik ground '‘that the interest of
the theatre” demands such a change. For the Director, the
sudden termination of the contract probably means the forced sale
^ jat an enormous sacrifice of his entire equipment — in short, com-
plete ruin.

A nation whi<?h has only recently entrusted its municipal
authorities with so comparatively uncontrovr^rsiai a business as
education, will listen with sympathy to the plea that the inter-
ference of the municipality in any out the financial side of an
artistic enterprise must be intoleruble. A telling instance is quoted
of a member of the Committee who insisted on tlie production in
his own provincial city, of a ]>lay which had specially appealed
to him in the tondei mood induced by an exquisite supper in
Berlin. The play was not suited to the temper of the piovincial
audience ; it war not within the capacities of the caste. Yet the
Director was obliged to acquiesce, againjst his better judgment,
and earn a liarco, which did not endear him to his own Committee.
^ A more equitable lavr of the theatie. for in the matter of
contract, of general conditions and of liability to accident the
theatrical profession lies outside the common law, w^ould seem
to be an immediate and crying need. Such a law has been drafted
by the Association of*German actors, at whose instance the whole
enqui ry w as undertaken, and Dr. JReimers criticises the demands
of the Association with impartiality. Some of them she regards
as exaggerated and likely to defeat their own ends. On the other
hand, there is nothing exaggerated in the claim that Sunday
rehearsals, when there are already two performances on that day,
and any night rehearsals, which are held after the evening per-
formance, should be abolished. The regulation of Sunday labour
and of night work for women has been proved feasible in other
occupations — it should not be impossiblS here. The exclusive rights
given by theatrical contracts to the, employer constitute as flagrant
an injustice as ever* found its way into a Statute book. They
should be abolished. The actor is peculiarly liable to accident ;
he should not be excluded from the ordinary law of compensation.

The only bright spot in tKe present situation is the inclusion
of the actor in the new i^cheme of compulsory insurance. The
law which ordains that every employee who earns no more than
iilOO a year shall come within the old-age pension scheme, while
everyone who earns less than £125 shall be liable for sickness
insurance, has removed the two worst rocks in the actor’s path.

For the rest, nothing can save theatres from the consequence
of cut-throat competition with each other, or actors from the

H 2

100 THE ECONOMIC JOURNAL. [MAEOH

disasters of the mad rush that ^overcrowds the profession. Con-
cessions for the opening of new theatres are granted with incredible
recklessness, and obstacles only seem to attract capitalists to
madder ventures. Stage-stricken young persons of both sexes ate
encouraged by unscrupulous teachers, often indeed actors who
seek to add to their insufficient earnings by feaching their craft
to fresh victims.

To the student of German economics nothing is more signi-
ficant than the discouragement apparent in the writings of the
majority of those who investigate the existing economic structure
of society. Some, like the author of the Grundlagen des Modernen
Zeitungswesens, hope, with the courage of despair, for an appar-
ently spontaneous improvement in the tastes and habits of man-
kind. Dr. Eeimers pins her faith to definite reforms, which shall
bring the theatrical proletariat into line with the other classes
who have already felt the benefits of social reform. But the
panacea for our feal ills, the remedy which shall deal wdth the
monster of competition, is yet to seek. The most varied economic
investigations converge upon a single point, and everywhere,
below the surface, we can detect the stirrings of the same dis-
content. The newspapers, the theatres, and this trade and that
industry, — all would appear to make an increasingly precarious
living, none are free from the reproach of exploitation. ^^^TJiere is
hardly an author who does not foreshadow a condemnation of the
existing order, a question* whether individualism, even fettered
and restricted as it is, has not seen its day.

H. Eeinherz

Les Bases economiques de la Justice internationale. By

Achille Loria. PubiicatioDs de ITnstitut-Nobel norvegien.

(London : Williams and Norgate. 1912.)

The title of Professor Loria’s work might be * taken as
indicating a treatise on international law in its relation to inter-
national trade. But its scope is much wider, and might perhaps
be best indicated by some such English translation of the title
as this : “ The Operation of Economi 9 Factors in the Evolution
of International Society” — since Professor Loria uses “Inter-
national Justice ” in the larger general sense, and not in the
more special juridical one. The book is thus of interest, not
merely to lawyers and economists, but equally to the much
larger public interested in the development of a science, or a
philosophy, of international relationship. The needs of Europaan

1918] BASES BOONOMIQtJES DE LA JUSTICE INTEBNATIONALE 101

society will surely develop such science, drawing freely upon
such existing divisions of study as law, politics, economics ; just
as certain other social nevjds have developed such new divisions
of knowledge as genetics ; which h^ve been built up by drawing
freely upon and combining pre-existing divisions.

In the library of such science — which has hardly as yet pro-
gressed as far as possessing an exact terjninolog> — this book will
take high rank, mainly by reason o^its orderly classification of
a wide range of facts showing the part th^t trade and industry
have played in the development, not merely of political and
constitutioral forms, but of and moral conceptions, such

as religious toleration. Tie whole book is, indeed, a very clear
demonstration of the truth that it is impossible to separate the
economic from the moral and emotional developments of mankind
— a demonstrslion which, in view of certain cortemptuous
criticisms commonly levelled at the more recent efforts to show
„g^sound economic basis for international cb-operation, most
certainly needs to be made.

But Professor Loria will be read more for his facts than for
the conclusions which his book enables us to draw. In the
statement of his case he has adopted the lollowing method : He
enumerates in one chapter those factors which favour the
establi^toient of law and religious toleration — organised society,
in fact — and in the next those which operate to destroy them ;
or, taking the same factor, shows in one chapter how it operates
to the development, and in the next how it operates to the
destruction of those thingi^\ It will readily be understood how
such a method is well adapted to show clearly the isolated action
of each particular factor, but ill adapted to show the net result
of the totality of the factors. And the matter is in no way
men^d when we get a third chapter entitled “Les Eapports
^conomiques r6tablissent partiell^rnent I’organisation juridique
internationale,” and*a fourth entitled “Les Eapports ^conomiques
r6tablissent integralement le Droit internationale ” !

The diflS^culty, moreover, of this method is accentuated by
' the arrangement of the boolc. There is no table of contents,
no analysis of chapters, ip index, no differences of type to dis-
tinguish the author’s statements from passages which he cites
and criticises, and the footnotes, instead of being at the bottom
of the respective pages, are lumped together at the end of the
book. These are trifles, perhaps, but they -are trifles which have
made many books, which might be lucid and coherent, positively
maddening to read.

102 THE ECONOMIC JOURNAL [mARCH

Moreover, such a method makes Professor Loria*s book a
particularly difficult one to criticise. Thus, in the chapter headed
“Les rapports economiques detruisent Torganisation juridique
internationale,** the thesis of which seems to be (p. 30) that war
‘*eclate toujours comme une r^ation contre la ]:>ais8e du revenu,”
occurs the following passage : —

“La guerre de Cuba n’est qu’un produit du declin dii revenu
des fabriquants de sucre [imericains. La guerre du Transvaal
est I’oeuvre des financiers et des sp^culateurs de mines d'or, qui
esp^rent pouvoir tirer de grands avantages d*ime excursion
militaire dans I’Afrique aiistrale. Mais ces vell^ites des
financiers hritanniques sont a leur tour excittes par la baisse
inqui^tante dn revenu anglais. La guerre russo-japonaise est
un produit du declin de I’assiette ^conomique de la Russie et
par consequent de la baisse de son revenu, qui la pousse k la
relever grace a des expansions et des annexions violentes en
Asie tandis que de son cote le revenu japanois a Tetroit dans les
limites nationales, vent a tout prix s’etendre par rex])ortatioh
et par la colonisation de la Coree voisine et de la Mandchoiirie.
La guerre actuelle de la France contre le Maroc a uniqucment
pour but de contraindre cette region a faire des frais, qu’elle ne
pourra supporter sans recourir k im emprunt qui engraisaera
les banquiers fran^ais. Que dirai-je de plus? Aujoucd^’biii le"'
germe eVune guerie possible est tout entier dans la rivaltd
^conornique de 1’ Alleniagne et de rAngleterrc. L’Angleterre
n’arbore le nouvel imf>erialismc de Chamberlain que le jour oh
elle sent menacce par I’Allemagnef sa supr4matie dans les
industries textiles et metallurgique>^ ; d‘§.utre part la politique
mondiaJe de Guillaume IT. aiontre que Tunique but de Taction
germanique est Tabaissement de la puissance commerciale
anglaise. Les politiciens des deux pays, qui repr(!‘sentent la
classe des oommer^ants, et.occupent aiijourd’hui partout le
pouvoir, sont convaincus que leur patrie '^est destinVe k une
regression inevitable si elle ne triomphe pas de sqn rivale. Les
unionistes anglais, comme les lib^raux ou les radicaux partisans
de Texpansion qui soutiennent Asquith, sont pr^cisement une
Emanation des commer^ants : ils rev^nt de nouveaux marches
et de nouveaux clients. De merne les nationalistes lib^raux et
les libdraux dc^nocrates alleraands, avec la National Zeitung
k leur tete, ne sont que les d^l^gu^s poiitiques des industriels
de la Prusse Rh^nare et de la Westphalie.”

If this is intended as a partial statement to be read in con-
junction with a parallel partial statement of the opposite case in
the next or preceding f^-hapter, criticism is, of course', disarmed.

39133 bases ECONOMIQTJES DE IiA JUSTICE INTEENATIONALB 103

But if it is intended as a complete and impartial summary of
the whole of the factors or the determining factors of the conflicts
enumerated, it is quite obviously imperfect. To represent the
Spanish-American War or the Eoer War as the outcome merely
of financial intrigue is to ignore certain outstanding facts
which cannot be '^ignored if we are to have any just notion of '
the processes of war-making. In fact, one can «iay that, in the
case of the Anglo-German conflict for instance, merchants and
financiers as a whole fully realise its futility, and are throwing
their influence against its precij itation, while huge sections of
the public, who are unaware of possessing aiiy interest in the
conflict at all. are throwing the influence of their excitability
and temper on the side of conflict. Your honest roaring jingo,
who is so great and dangerous a factor in the precipitation of
these conflicts, has, foi the most part, no earthly private interest
to serve by tlie war which his general influence may at times
render inevitable. His action is due to genuine hatred or fears
%ased upon false conceptions of the relationship of foreign
nations to his own. He may think, like Lord Eoberts, that
foreign trade is a matter, not of having things to sell, but of
having power to exercise against someone else ; or he may
conceive of foreign trade as a fixed quantity which we “fake”
from cue another as the balance of power drifts from one to the
other; or of all nations as struggling economic units, rival
business firms, the gain of one being the loss of the other — one
could go on reciting indefinitely the sort of picture which is
evidently in the jingo mind, and which necessarily and logically
sets up the hostility, hatred and funk which play so large a rdle
in bringing about international conflicts. These things may have
their origin partly in economic conceptions, but are psycho-
logkially distinct. To represent the conflicts enumerated by
Professor Loria as the direct outcome of financial intrigues
reminds ’one of the Chinese Socialist who lays down certain
doctrines concerning the relation of cholera to the Capitalistic
system. The story runs that a Chinese Coffin Trust, in the
interest of its dividends, had bribed a provincial governor to
suspend sanitary arrang|ments during an outbreak of cholera —
“Plain proof,” argued the Socialist in question, “that cholera
is a Capitalistic interest, and will never be successfully dealt
with until we have abolished the Capitalistic state.”

The most powerful economic forces of our time are those
which operate unseen and unnoticed by those subject to them,
and which escape conscious political control. It is not the result
of any coliscious policy of government which has m9.de German

104

THB ECONOMIC JOURNAL

[MARCH

industry so largely dependent, directly and indirectly, upon
foreign capital ; or which has caused France to furnish so large
a part of the financial sinews of war for German industrial
development. The great economic forces of the world are the
resultant of isolated individual acts, no one of which is taken
with the object of bringing about the result which in conjunction
with others of a like kind it finally achieves. All of which
means, not that the econonyc causes of war are not the chief
causes — they almost certainly are — but that those causes often
act not directly or consciously at all, but indirectly, and irrespec-
tive of the conscious volition of Governments.

There are, indeed, two main facts in the economic develop-
ment of the world which have the most direct bearing upon
the problem of international conflict, and with neither of which
Professor Loria deals, unless it be by casual references, in this
book. The first of these facts is the complex division of labour,
which, despite tariffs and protectionist devices, has made the
economic unit something quite distinct from the political unit.
Since the frontiers no longer coincide, political power has become
largely irrelevant to economic ends. The second fact is that
the linking of telegraphic communication to our credit system has
made of the industrial world an economic organism endowed
with sensory nerves, by means of wdiich any appreciable dt piage
to one part is instantaneously felt by the other parts, and which
sets up therefore a co-ordination of pohcy which mast finally
end in the cessation of conflicts between tfie varioas pajis of
the same organism. These are iht Ovdstandmg facts of n^ern
industrial and financial dev<^dopment, and ih^'^ oiics perhaps which
bear most directly upon international poli«.y. It to be hoped
that an author so v/ell equip])ed to show their operation as
Professor Loria vill turn hfs attention to them in the future.
Meanwhile we may rejoice that the general conclusion which
Professor Loria himself draws seems to be indicated ‘in the
following passage : —

“Si le dcveloppement snivi jusqu’ici par les rapports
economiques et par les rapports jufidiques internationaux, qui
easont derives, permet quelques previsions sur leur dcveloppe-
ment h veiiir, on peut facilenumt prc^.sager qu’avec le progrfes
ulterieiir des rapports economiques, les guerres deviendront de
plus en plus rares et qu’elles finiront par disparaitre com-
plMement.”

Ainsi soit il !

Norman Angef,l.

1913] SOH0MPKTBR : PIB WIR3JS0HAPXLICHEN BNTWICKLXJNa 105

it.

}

Theorie der wirUchaftlichen Entwicklung. By Dr. J.
Schumpeter. Pp. viii + 648.^ (Leipzig: Duncker und
Humblot, J912.)

Dr. Schumpeter’s book, although it covers a great part of the
field usually covered by economic manuals, is not one itself ; ^it
is rather, as he himself puts it in his introduction, the develop-
ment of one furdamental idea, whic^ underlies most of his work.
He does not set up this idea in opposition to the work of his
predecessors ; on the contrary, he considers it a further, necessary
development, and lakes much pains to fit it into the existing
frame. This frame is given in the first chapter, which is both
an introduction to his own work and an interesting and con-
scientious survey of ('ontinental as well as of English and
American ec\momic literature. Tn it we see foreshadowed the
outlines of his own work.

Economists, he holds, have hitherto dealt alm(;st exclusively
with problem3 of a static society ; their teachings are explanations
of its phenomena. The idea of a static society in no way excludes
either the incidents of ‘'economic friction,” or development whi^i
merely preserves the equilibrium; thus, e.g. development in pro-
portion to the grow^ih of population does not destroy the static
chari^^ter of society; it is mere readjustment, not progress.

But there is according to Dv. Schumpeter such a thing as
spontaneous, economic development, development due to new
combinations in economic life, to constructive economic leader-
ship. At the present time we are so accustomed to the
phenomena of changg that we are only too inclined to forget that
anything else is possible ; that there might be a state in which
economic life would be one series of uniform cyclers, rhythmically
repeating themselves, one state of static equilibrium. That it is
not so is due to the entrepreneur^ the man of action, the originator
of new systems, wiiich if successful enter as component parts into
the circulatoi:y flow of economic life. His action and work cannot
be explained by the hedonistic rules of the usual homo
econotnicus ; he forms a type by himself.

The essential featur| of his action is the attempt to increase
the eiSficiency of production (in the widest sense) through an
improved use of the means at his disposal. If he succeeds, he
obtains a surplus. Hoping to achieve this surplus, he is able to
pay a premium to those who will give him the command of the
required means. To give him this command is the task of “credit.”
The payment for this command is “interest.” Interest can be

106 THB BCONOMIC JOURNAL [MARCH

paid, because there will be the surplus out of which it can be
paid. In a static society there would be no such surplus ; in a
state of perfect equilibrium the value of the product is the sum
of the values of the means by which it is produced. Prof. v.
Bohm-Bawerk sees in “time-preference” th^ factor which
(besides the incidents of economic friction— always understood)
causes the divergence of these values. Dr. Schumpeter asks :
is the preference given to pi*esent as against future values the
direct effect of independent psychological factors, or do we value
present values higher, because we are able to retain them to a
future date and still draw incomes from them? His answer is
that in a static society there would be no reason to give this
general preference to present values : the rule would be equality
of both. In the existence of economic development Dr.
Schumpeter sees the one great reason why preference is given to
present values.

Dr. Schumpeter does not merely throw out his idea ; he follows
out its necessary consequences ; he surveys from his new point of
view our existing ideas of various economic phenomena. He
devotes an interesting, though lengthy, chapter to the nature of
economic crises, and shows that besides the crises which are due to
disturbances originating outside the sphere of economic life, there
is a category due to the very nature of economic developn»ent.
Economic development works interm Itlentlv ; innovati.'Uis in
different branches of econo^nic activity follow one another in rapid
succession. Each burst of this cdiaract-er necessitates n r>eriod of
readjustment, of “statisation : this process gives {he impression
of a backwash, sometimes it may beccane au acute crisis. It is
impossible in a short review^ to deal wdth the numerous ramifica-
tions of the author’s work ; still more, to enJorse or criticise them.
All we can say is that Dr. Schumpeter does not shun any amouht
of trouble to make ius wwk complete; that he is very fair and
very conscientious; that he grapples with all kinds ol possible
objections. Even too much so ; he often answers possible
questions, which if asked are better left unanswered. He is not
satisfied with presenting to us his building, he presents us with
all the scaffolding which he has used, ani takes us over all the
paths he has trodden. This, combined with frequent repetition,
makes his book cumbrous. The reader, who could not under-
stand him if half the explanations were omitted, will hardly wade
through the work in its present condition. Still no one who takes
a real and thorough interest in economics ought to pass it by.

L. B. Naymier

107

1918] PASSOW : DIE GEMIS€HT TJNTEBNEHMXJNGEN

Die gemischt privaten und dffentlichen Unternehmungen auf dem
Gebiete der Elektrizitdts^ uhd Gasversorgung und des
Strassenbahnweseas, By De. Bichard Pas sow. (Jena :
Gustav Fischer. 1912. Pp. vi + 220. 6 marks.)

This book contains an interesting and detailed account '"of
what is probably the most recent phase of municipal trading in
Germany, viz., the holding of shar^ in, and the representation on
the directorate of, electricity, gas, and tramv/ay companies by local
authorities. This movement curing the last few j^ears appears to
have succeeded an earlier one in favour of municipalising public
utility services. The new development is ascribed by the author
partly to the recognition by local authorities of some of the diffi-
culties associated with municipal management of trading under-
takings, an(i partly to the technical and economic desirability of
electricity, gas, and tramway undertakings conducting their
operations over large areas, which generally •embrace the districts
of several local authorities. Although a large area of operations
may be secured by one municipality t’-ading outside its boundaries,
or by the establishment of some form of joint board by the
various authorities concerned, in practice it is not always possible
to secure the necessary agreement amongst a number of local
autl orities whose interests may conflict. In some cases munici-
palities realising the need for extending their area of operations
have actually leased their trading undertakings to private com-
panies; a striking instance is that of Konigsberg, which in 1910
so leased its electricity and tramway undertakings. More fre-
quently municipalities have sold their works to companies, or have
undertaken to buy gas or electricity in bulk from companies, in
which they are themselves shareholders, e.g., Darmstadt has
disposed of its electricity and tramway undertakings to such a
company, which owns also th^ suburban lines ; and Cologne has
recently entered* into an arrangement to buy temporarily some,
and ultimately all, of its current from another similarly constituted
company. In other cases a local authority has preferred to
purchase shares in a company supplying a public utility service in
its area, rather than lluy up the whole undertaking; Strassburg,
for example, has bought a majority of the shares in both the local
tramway and the local electricity companies. Where a local
authority purchases shares in a company, it is generally brought
about by agreement with the private firms and individuals who
are shareholders; the local authority does not necessarily secure
either a majority of the shares or a right to nominate a majority

108

THE ECONOMIC JOURNAL

[march

of the directors* In some cases several local authorities are share-
holders in the same company. Dr. Passow is of the opinion that
more of these joint public and private enterprises are likely to
be established in the immediate future, although he expresses
some doubt as to the permanency of this form^of organisation.
In several cases the local authorities have secured the right to
buy out the private shareholders on agreed terms, and in at
least one case have already doije so.

This type of municipal trading is almost unknown in this
country ; it is, however, deserving of the most careful considera-
tion, and Dr. Passow’s book may be recommended as providing
a very convenient means of studying the question.

Douglas Knoop

La (fcstion par VEtat et les mnnicipalHes. By Yves Gityot.

(Paris: Felix Alcan. 1913. Pp. viii + 437. Bfr. 50c.)

This book deals With national and municipal trading of many
kinds in many countries, but it can make no claim to be a scientific
study of the subject. The author has collected figures and state-
ments of various kinds from a variety of sources, and seeks to
show that it is undesirable that the State or the municipalities
should do anything which can be done by private enterprise.
The book appears to have been produced in a great hurry ; it
contains numerous slips and mistakes; the figures and Rtau^ment'^
are not always correct, and some of them appear to bo ^relevant ;
the sources from which much of the material is t alien are by no
means authoritative. A few oxaiiijdeb may be given In one
list of English towns (p. 130) eleven ol forty-seven,
and in another list (p. 144) four out of twenty-four are spelt
wrongly. On p. 24 we read that the London water companies were
purchased by the Metropolitan Water Board for 47,500,000 fran^)^
(? £) ; on p. 151 tiiat the ix)pulation of Liverpool is 75,900
(1911 census : 746,506), and that the popiuatioil of Manchester
is 865,900 (1911 census: 714,427); and on p. 162- that the
population of Salford is 102,000 (1911 census : 231,380). One
statement (p. 123) by M. Guyot is that British municipal gas
works are exempted from taxation, whereal, as a matter of fact,
they pay rates and taxes like any gas company. Another state-
ment (p. 62), referring to the Prussian State Railways, is that
the Government in 1907 imposed a tax on railway tickets and
abolished return tickets. The tax, in reality, was an Imperial, not
a Prussian, tax. The author goes on to state that in this way the
first-class fares were raised by 44 per cent., the second-clasfi by 25

109

1918] lilBFMANN: DIE UNTEENBHMUNG8POEMBN

per cent. , and the third-class by 16*8 per cent. The facts are these :
Prior to 1907 the fare for single tickets (by slow train) wasSpf. per
klm. first-class, 6 pf. second-class, and 4 pf. third-class; and the
fare for return tickets was half as much again. After the abolition
of return ticket^ #e single faru (by slow train) became 7 pf. per
klm. first-class, 4*6 pf. second-class, and 3 pf. third-class. ]B*)th
before and after the change somewhat higher fares had to be paid
to travel by eypress trains. How fsi, Guyot obtained his figures
showing the percentage of increase in fares is a mystery, as the
ticket tax is not sufficient to account for them. On p. 140 appears
the statcDjent that the London County Council made no provision
for the depreciation of ilie tramway undertaking in 1910-11,
whereas they actually set aside something like £130,000 for this
purpose. On p. 226 tlie following statement, made on the
authority o" a newspaper report of a sjxjech at a congress of Post
Office employees, appears without any comment : “The Post
Office Savings Bank [of the United Kingdom] loses £100,000
annually on account of bad administration and bad investments.”
Amongst the matters which, to the reviewer at least, appear to be
irrelevant may be mentioned the reference (p. 277) to the estimate
of the Naval Intelligence Department in 1909 as to the number
of Dreadnoughts Germany would have in 1912, and the lengthy
discussion (pp. 409-414) of the action of the United States Senate
with regard to that clause in the Hay-Pauncefote Treaty which
deals with the Panama Canal toll§.

The author has sought to make his book conclusive by
embracing in it references to many countries and a great variety
of undertakings; ^s a consequence, his treatment of any one
country and of any one industry is far from comprehensive. If
a more judicious selection had been made of the material, if
greater reliance had been placed oif first-hand authorities, if more
care had been taken in checking the accuracy of the figures and
statenients, and* if the matter had been presented in a more
systematic .manner, the case against municipal and national
trading could have been stated in a way which would have carried
far more conviction.

Douglas Knoop

Die Unternehmungsfornien. Von Professor Dr. E. Liefmann.

(Stuttgart: E. H. Moritz. Pp. viii + 216. Price 2.50

Marks.)

This work is a companion volume to a treatise on Kartelle
und TtusU, by the same author and publisher, and forms m

#110

THE ECONOMIC JOURNAL

[march

introdaction to the study of the position and developmental
tendencies of business undertakings in the present state of indus-
trial society. It is intended for the business man and general
reader rather than for the professed economist, and fully serves
its purpose as a guide to the problems of organiplion which will
come up for solution in the near future. While it is necessarily
not comprehensive enough to contain all the material required
for the complete weighing pf all the considerations affecting
these problems, there are few points of importance left entirely
undiscussed. Naturally, it is chiefly intended for the German
reader, but the English reader will find it very useful precisely
on account of those differences in German methods of organisa-
tion with which he is little familiar in English systems. For
this reason ii is to be ho])ed that an English translation will soon
appear. Dr. Liefrnann is well-known to economists fcr his
excellent studies of the development of kartells, and the business
man whose attention is not restricted merely to the happenings
within his own counting house will find it to his advantage to
follow the example of the academic persons whom he too fre-
quently despises.

The book is divided into four parts : a lucid sketch of the
development from home industry to the injSustrial undertaking
of to-day, a discussion of the joint-stock company and its results,
a survey of co-operation, and a brief account of publich-owncd
undertakings and their limitations. The second section claims
most of our attention. The joint-idock company has proved an
excellent means for collecting capital foi mating it mobile, for
spreading risk, and for distributing i)ropert y. ^ Bui as investment
grows, so, too, does unearned income A wealth-owning class
thus finds it easy to maintain itself )n possession, especially
where limitation of the family prevails. The latter practice is,
in Dr. Liefrnann ’s opinion, closely related to the desire for an
income derived not from personal exertion but from investment.
He holds that management of companies by paid olBcJals either
may impair that spirit of enterprise on which industry has been
built up, or, as in the case of banks, may lead to recklessness.
The part played by banks in German i^idustry is much more
direct and important than the equivalent part played by British
banks. This is mainly due to the German company law which
requires that before a company can begin operations the whole
capital must have been subscribed, and that atjeast one-quarter
of the amount payable in ca;:h must have been received. Usually,
therefore, the promoters take up^all the capital and issue it to

1913] LIBPMANN: DIK tJKTBBKKHMUNOSPOEMEN

the public at a later date. This need of a greater initial command
over money has lad to the develop|rent of Efiektenbanken, or
banks which either as the whole or as' a part of their business
devote themselves to the financing of company* promoting. To
accept short-tern^ deposits and lo make loans or investments
for longer periods is an offence against strict banking ; but, oif
the other hand, German banks work with a larger capital of their
own than do English banks. SubsrUjuently, the banks issue to
the public the shares in the companies they have established, or
retain a part of the capital the iiselves. German investors rely
much on their banks, and readily take up the stocks thej issue.
Either in their own interests or in those of their investor-clients,
German banks maintain a close connection with the companies
they promote and secure tepresentation on the boards of directors.

This close interlacing of finance and industry is characteristic
of Germany, and it leads to the furthering of all plans for the
cessation of competition and the increase of profits, especially
by such methods as the community of interests through mutual
stock-holdings, common directors, holding companies, &c. The
same ends are attained in the United States through the agency
of powerful individual financiers, but in Germany the holding
companies are of dominant importance, especially in light rail-
ways end the electrical industries. Closely connected with the
mobilisation of capital through the joint-stock system is specula-
tion in industrial shares on the stock exchange. WeU;;known
evils result, but, on the other hand, it is claimed that this
speculation leads to an equalisation of the prices of goods, an
assertion which Dr.tLiefmann does not accept. These new
developments of the company system require further legislative
attention, especially, in the author’s opinion, in the direction of
greS-ter publicity and more effective audit.

The co-operative system has, developed in different directions
in Britain and Germany. In the former country the co-opera-
tive idea came into activity after Hie industrial revolution, when
there was a large factory population, and realised itself in distri-
butive stores for the aivkntage of the workers. In Germany,
while the small-scale style of industry was still the rule, co-
operation came in to assist the small master against the lar^
factory by means of credit banks, &c. Co-operation has, in DrI
Liefmann’s view, reached its fullest development, and is now
apt to lead to a reduction of the spirit of individual initiative and
to the standardisation of demand ; these opinions seem
eiaggerated* i

THE ECONOMIC JOTJBNAX

[march

112

Space does not permit of an examination of the aijthor’s
views on State-conducted industry. He regards nationalisation
as a remedy for the evils of private ownership which is only
operative within narrow limits. The participation of the State in
the coal -mining and potash industries of Gerigiany he considers
to be in no way successful. As a rule other methods of control
should be sought when it is necessary to counteract the effects of
private monopoly. t

These somewhat disconnected references will perhaps serve
as an indication of the topics which Dr. Liefmann discusses.
Merely lo enumerate them all would much oiitpass the limits
permissible for thi.s notice.

Henry W. Macbosty

Lectures on British Commerce, including Finance, Insurance,
Buaine.ss, and Industry. By The Bight Hon. Frederick
Huth J.yckson (and others). With a Preface by The Hon.<'
W. Pember Beeves, Director of the London School of
Economics. (London; Pitman. 1912. Pp. xvi.-t-279.)

The International Society for the Promotion of Commercial
Education is apparently a development from the German associa-
tion of the same name, of which Dr. Stegemann, of Brunswick,
has for some years been President. The International Society,
like th^ German association, desires to embrace within its range
of activities all varieties and grades of comrcerciRl education;
but its membership, as a maiiteii^of fact, consists, T believe,
preponderatingly of representatives of cominercial boys’ schools,
and of commercial academies of the older type , and its Central
Committee does not this year — nor did it in a recent year for
which I happen lo have a rSport — include a single representative
of these great Handelshochschulen which have come into existence
in Germany during the last fifteen ^ears, op of the American
Universities, which have done equaHy great things, though in
a somewhat different way, for conlmercial education of the
highest type.

The Society arranges for a three weeks’ summer school each
ttar in some business centre. That at H|ivre, for instance, in 1909
Hinught together an audience of 144, of'whom the great majority
were teachers in commercial schools, not men themselves looking
forward to a business career. Thus, of 48 from Germany 22 were
teachers, of 24 from Au.stria 14, of 46 from Switzerland as many
as 38, and all 7 from Hungary. Three ^;^renchmen only wete

1913] HUTH JA-CKSOK: lbctxtbbs on bbitish oommerob 113

present ; mi it pretty obvious from the report that the first
ooncern of most of those attending ^the lectures was to improve
their knowledge of the language of the country they were visiting.

It is possible that this state of affairs was not altogether present
to the minds of the authorities of the London School of Economics
when they invifced the Society to hold its 1912 meeting in Londdn ;
otherwise they would ha\e been satisfied with the attendance
of 203 persons “mostly fiom tl.e Corftment/’ and would not have
been disappointed at the presence of “so few Englishmen.*’
Many of those present had i leir expenses paid by their own
governmeiits and schools. Mr. Beeves, in his Preface, remarks
that “it would he well foi English County Councils, Chambers
of Commerce, &c., to oiler similar encouragement to their picked
students.” But this i-. already being done by several education
authorities io\ teacheis of languages in their areas ; and doubtless
teachers in conimerc»al s(*hools are as eligible ps others. Certainly
more could profitably be done in this dire(‘fioQ. We are still
quite absurdly insular in this country ; and if half the teachers
of “Commercial French” or “Comme^'cial Geiman” in evening
classes could be given an opportunity to go to P'rance or Germany
for three weeks, it would do them a great deal of good— and
possibly some little good to British trade. But we need not over-
estimate the example we are asked to follow.

Of the lectures given in London t^n are printed in the present
volume. The first is on the Bank of England, by Mr. Frederick
Huth Jackson. It shows how all is for the best in the best of
all possible banking systems. Then follows one by Dr. Armitage-
Smith on the British System of Taxation. It indicates, not
obscurely, to the benighted foreigner how superior is the British
system of taxation for revenue only — with the not insignificant
exception of the taxes on alcohol — to the sort of thing they ought
to be groaning under in their jown countries. Incidentally it
expounds* Adam Smith’s canons in a free- trade sense which
had not occurred to the master. When Smith spoke of the
desirability of “certainty,” he at any rale w^as not thinking of
the “real incidence” of | import duties. Next comes a lecture
on Postal Organisation, which contains some interesting bits oi
information, but also a large quantity of quite uninstructW
detail : like the table of the London staff and their scales of pay,
with entries such as this : —

Scales of Pay Total.

Une&tablished Assistant Inspector | Various 1

^ of Messengers )

No, 89— VOL. xxin.

114

THB BOONOHIC TOtTEKAIu

[MAKOH

Of differtot Mr. Douglas Owein^s lectures on

London at a Port, and on the Machinery of Marine Insurance ;
two well- written sketches, which will set a siudent thinking.
Much the same may be said about Mr. Barling on British
Shipping. It is amusing to see how afraid the lecturer is to
speak quite frankly in favour of shipping combines. The rebate
system certainly rules out ascertain measure of competition — but
the position of the shipowner is at least deserving of recognition,”
(fee. The humour of the situation is that while everybody in
Bmgland ytill does lip service to Competition, everyone whose
lousiness inakes it his interest to combine is now hard at work
^^laobiaing. Mr. Bisgood’s two lectures on Life and Fire and
...her more modern forms of Insurance also have form and move-
ment; and perhaps their matter is rather more novel. It is
interesting to notice the tendency towards amalgamation in
insurance business,^ and the practical control of the whole of the
fire insurance business obtained by the Fire Offices’ Committee
or ” Tariff.” The lecturer becomes positively amusing when he
describes the methods of “industrial” insurance. Accordijpig to
Mr. Bisgood, the £4,000 subscribed capital of the Prudential has
been raised to a present capital of .£1,000,000 solely by appropria-
tions from profits, and last year it paid £550,000 to its share-
holders. This is probably unparalleled ; but it is this sort of
thing, on a lesser scale, v/hich makes it so difficult to ascertain
statistically the rate of profit. The next lecture, on the Coal
Industry, is platitudinous; and, coming from the Editor of the
Colliery Guardian, rather disappointing. The coal miners will
take note of the observation jis to wages boaAls, that the admission
of “the principle that other factors, besides selling prices, such
as trade prospects, the volut^e of trade, ^c., may be introduced in
settling the wage rate” “has operated in the long run to *the
advantage of the workmen.” But one would like to know what
is really meant by a sage-sounding utte»'ance* like this : “Those
who may be best trusted to form an estimate are agreed in
believing that ... a permanent rise in the price of fuel may be
looked for as soon as a revival in the demand places the balance
of power in the hands of the trade.” There is much virtue in
“as soon as.”

An outline by Mr. Graham of the various branches of the
Woollen and Worsted Industries completes the series.

In his Preface. Mr. Beeves thus expresses himself: —

“It is a mistake to think that we are indifferent on the question
of comuiercial education in England. The leading men in

iWS] matata; la wSglame 116

is 1 <

industrial and commereial affairs are keenly and anxiously
interested. Bi^t they have not yet decided What type of education
is required, t/et us fnist they will do so before long. When
the young man who wishes to ent^ business knows that a certain
definite type of education is required, he will not be backward
in getting that education.’* ^

My experience, I am afraid, is^ less ^.encouraging than Mr.
Reeves’s. I hdbve come across very few leading men who can be
called “keenly and anxiously interested” without a straining ot
language. A few, very few, ace really keen, though many are
vaguely dissatisfied with ^hmg^. as they are. It is hopeless (I
cannot help thinking) to expect the business world itself ever to
“decide what tyjXi of education is required.” Those of us who
are in charge of Scb(K>is of Economics and Faculties of Commerce
have the task laid upon us of translating the inart’oulate desires
of the businesn woild into systematic intellectual disciplines.
And 1 cannot but regret that Mr. Reeves should have employed,
even within marks of quotation, the term “business-getter” to
describe the product we are to aim at. In a sense, of course,
every efficient business man is a “business-getter.” But the term
owes its present vogue to a rather cheap sort of “business
magazine,” which identifies commercial ability with adroit adver-
tising and seductive correspondence. These have their place ;
but their present prominence in such magazines is due chiefly
to the fact that they are the easiest things for the “business
journalist” to write about amusingly.

W. J. Ashley

La Reclame. By Victor Mataja. (Edition Pol-Moss. 1912.

< 2 fr.) •

The significance of the present pamphlet lies in the fact that
it is by the pen of a distinguished Austrian jurist, who in 1910
published a serious work on “Advertising” in general, which
has had a large vogue on the Continent of Europe. The present
study suffers from severd compression of material to an extent
which almost destroys the logical significance of the concrete
teaching which it is the author’s aim to impress on his readers.

Another handicap to its wide acceptance in this country lies
in the fact that it is addressed to the author’s fellow-countrymen,
who have not yet reached the same level of enterprise and
progressive methods in business which are the current standard
among western communities. Various principles are enunciated

X a

116

THE BOONOMIO JOUKUAIi

(MAEOH

and iwraciices enjoined which in this country ere methods so
well known that they are on the point of being replaced. The
most useful lessons which he has to inculcate are drawn chiefly
from American experience, gtill he throws due weight <ai one
or two principles which, though well known, are often forgotten
among us; such as, that it is at present more difficult to sell
a commodity than to manu^facture it (p. 14) ; that the effect of
very extensive advertising is to make known not only the qualities,
but the defects of any commodity with startling rapidity (p. 22) ;
that the special influence of psychology on advertising is critically
important (p. 30, 31) ; that the cumulative effect of good adver-
tising makes the results achieved by it advance in geometrical
progression (p. 39) ; that the manufacturer maintains touch with
the consumer only through a long chain of intermediaries (p. 48) ;
and finally, which is the keynote of the book, that no advertising
will secure a permanent sale for what is not wanted by the
public (p. 52).

G. Binney Dibblee

Experiments in Industrial Organisation. By Edwabd Cadbxjby,
with a Preface l)y Professor \V, J. Ashley. (Longmans,
Green and Co. 1912. Pp. 296.)

Mr. Cadbury’s volume contains a detailed and extremely
interesting account of the various forms of welfare woric which
are in operation at the Bournville cocoa and chocolate factory.
We have all, of course, long been aware of the general character
of what his firm has endeavoured to do tSr its workpeople, and
have been ready to join in the tribute of admiration which
Professor Ashley, in his introductory Preface, pays to their
active sense of social duty. I doubt, however, if many, even of
those who have had the privilege of personally, visiting
Bournville, have hitherto fully realised how great an amount of
thought and care must have been expended in the development
of the various arrangemeufs, organisations and institutions which
are now flourishing there. I shall not ittempt in this review any
enumeration of them or any summary of Mr. Cadbury’s book.
To appreciate what is being done one needs, not an outline, but
the detail to be found in the book itself. The underlying spirit,
however, is well shown in a small rule on a matter of minor
importance : “The names of a few girl employees, who suffer
from weak heart, etc. , are sent by the doctor to the Girls’ Works
Committee, and these girls are allowed to leave their workrooms

193,33 GIBBON : MBBIOAL BBNBPII IN GBRMANy AND DENMABK 117

five minutes before the usual time of closing, both at the dinner-
hour and in the evening, in order Jhat they may avoid the rush
which is inevitable when thousands are leaving work” (p. 96).
A trifie this, no doubt, but a trjfle indicative of much ! Mr.
Cadbury’s book contains a few references to general questions-;^
hoW far an employer, in establishing institutions, should nlhke
them special to his works or generaj to his town or village, and
so forth — but practically the whole of it consists m a simple
and direct account of -the work of the firm. To students whose
interest in economics is bound up with an interest in bettering
social life, i< cannot be recommeuded too stiongly. For in it they
will find set out an expuiple of what Dr. Marshall nas taught
us to regard as a great need of the age — true economic chivalry.

A. C. PiGOU

Medical Bmefit in Germany end Dinmark. • By I G. Gibbon,

B.A , D.So. (London : V. S. King & Son. 1912. Pp.

XV + 296. Price 6s. net.)

In this book Mr. Gibbon mainlains, and even increases, the
reputation which he already possessed as an authority on this
subject. Compared with his previous work on Unemployment
Insurance, this one seems to be the better of the two. For it
possesses to the full the many merits of the earlier book, and,
in addition, is decidedly the more readable. As before, Mr.
Gibbon is most happy in his selection both of subject-matter
and treatment. He has limited his inquiries to two countries
which form an admirable contrast to one another. For Germany
has a compulsory, and Denmark a voluntary, system. The work-
ing of the two, therefore, can be contrasted, and a very interesting
contrast it is. Moreover, in each of them the system of insurance
is more widely extended than elsewhere. It is a pity, however,
that at tile end a diapter has not been devoted to a general com-
parison of the workings of the two systems, summing up what
has been stbid about them in the body of the book.

The general method «f treatment is of the same character as
that adopted in Unemployment Insurance. The subject is divided
into five chief sections, dealing respectively with choice of
medical practitioners, their remuneration, control of medical
service, medical and surgical requirements, and institutional
benefit. Finally, there is a short chapter on insurance and
pubjic health authorities, and a longer one of general conclu-
sions, summarising the detailed verdicts which he has given in

THE BCOJsrOHIO JOXJENAL

[MABOH

connection with each branch of the subject. Every section has
three chapteis devoted to it : — the first describing and criticising
the policy and practice of Germany, the second thosife of Denmark,
and the third giving the conclusions of the author, which are
discussed at greater or less length according to their importance.
Upon the chief subjects of controversy in Great Britain at the
present time, such as free ^choice of doctor and payment by
capitation fee or by visit, the experience of Germany and Denmark
is most illuminating. Mention should also be made of the eleven
interesting appendices which are by no means the least valuable
part of the book.

Mr. Gibbon's conclusions must carry great weight. He is
no blind partisan of insurance, and recognises to the full
the undesirable results to which it may lead. Of these,
deliberate malingering is by no means the worst; nor is it even,
in Mr. Gibbon’s view, a very considerable evil. Possibly
he is too sanguine on this point; but he is probably right
in regarding valetudinarianism as a more serious danger. This,
he says, the very existence of insurance is likely to encourage by
putting medical treatment and remedies within easy reach of the
patients, unless the societies and the insurance authorities gener-
ally take definite steps for the ediHiation of insured persoiiis, and
not least in relation to the principles of every-day health and
hygiene. For instance : “T^at insurance scheme which proposes
simply to treat sickness ’s not likel\ to achieve very g^'eat ^>enefit.
Whatever success it may at+ain. it may, liuless wise precautions
are taken, sow almost as rriauy. if not more, evils than it removes.*’

This is one of the reasons why tb'i auth'^t j>roposes to combine
insurance with payment by the individ'^ai person of part, though
only a small part, of the cost of medical service and requirements.
He regards this as one of ttie best guarantees against contiriual
resort to drugs and the doctor, and a ixdicy of this kind would do
much to dispel one of tlie best-founded apprehensions of "the pro-
fession. The proposal could, in his view, best be carried out by
a system of deposit. For the organisation of the medical service
he looks to the gradual grow^th, in lother countries besides
Germany and Denmark, of corporations of doctors which will deal
for the profession as a whfile with the societies, and within which
free choice could be given to the insured persons. The general
employment of full-time salaried officers is not recommended so
far as siclmess insurance is concerned, except as a protection
against unreasonable demands. For many reasons it is preferred
in the case of invalidity benefit. To a limited extent, however,

119

1913) WEBB 4ND FBBBMAlf : SBAS0:NAB TBADBS

■ V:/ , % '

qualified practitioners outside the society might be given the right
to treat insured persons. This: system seems a very different one
^from that established in this country, but with good management
the panels should in time develop into corporations of the kind
proposed by Mr. Gibbon.

As' regards remuneration, payment for the whole body^ ot’
insured persons should be made by a fixed capitation fee, whilst
that of the indhidual doctor should be according to. services ren-
dered — that is to say, the number of visits, ^consultations,
operations, and so forth. Indeed, in Germany, where this system
frequently prevails, the scale of charges is often fixed by an official
tariff drawn up by the (Government. The use of this method
involves the existence oi a corporation of doctors, to whom the
total amount of the fees is paid over by the societies, and distri-
buted among the various doctors accc^rding to work done. They
themselves can be tn^.steci to guard against the abuse of the method
on the part of individuals. Space will not perhiit mention of the
many other interesting proposals of the book. I need only add
that the criticism ^throughout is keen and able, and, above all,
fair ; and probably the final form of any system of insurance will
be not far different from that suggested by Mr. Gibbon.

N. B. Dearle

Seasonal Trades, By various writeil3. Edite.^ by Sidney Webb
and Arnold Freeman. (London : Constable and Co. 1912.
Pp. xi + 410.)

The various studies in this book were made in connection with
Mr. Sidney Webb’s seminar at the London School of Economics,
and it is plain from the quality of the 'work that the members of
the* seminar profited much more from researching under direction
than the^ would have done from attending many lectures.

In his introdifbtory remarks Mr. Webb postulates “as an
economic hypothesis to be tested . . . that there is, in the United
Kingdom of to-day, no seasonal slackness in the community as a
whole.” The hypothesis !s hardly borne out by the facts, though
an enormous amount of seasonal unemployment cancels out
theoretically, so to speak. It is questionable whether in a world
broken up by climatic seasons the residuum would disappear
even if all the facts could be taken into account. The truth of the
proposition that at every time of the year there is employment
for every efficient person at some wage is theoretically unassail-
able, of course ; but this is quite another matter. However, from

120

THE SOONOMIC JOtJBNAIi

[MABOat

the evidefice brought forward in tbi^ book and ekewhere^ it is
evident that*.the actual residuum is immensely greater than the
theoretical one ; and this is a thing to be explained.

In order fully to grasp the problem of seasonal employment, it
is needful to examine closely the elements of seasonality and their
co-ordination, as well as the absence of their co-ordination, in the
world’s work. Inherent seasonality is extraordinarily common in
w^ork, and it has been rendered more common by specialisation.
But the great mass of it, by a system of dovetailing, has been pre-
vented from causing seasonal unemployment. In the light of
experience it is arguable that it has been one of the tasks of
industrial organisation to escape the losses caused by a system
of periodic dismissal and re-enyiloyment of labour, and secure
the economies of specialisation without increasing these losses.
Organisation to this end has not, as a rule, failed where it is
calculated to pay the organiser substantially ; but it has failed
where the gain is not individualised. Thus, within many indus-
tries w^e find dovetailing of seasonal tasks, but not as between
different industries. So, to use a very technical example, the
fitting together of jieriodic demands for labour inter-industrially
(as it may be expressed in a word) is lacking just for the same
reason that the equalising ol marginal returns inter-industrially
is lacking (that is, the equalising of collective marginal returns).
There are no inter-mdiistrial interests : ali interests aie intra-
industrial. Consequently, tlie setting-up ol an inler-irdustrial
agency or authority (such as a labour exchange) is essential, if
seasonal unemployment is to be minimised Jt is not reasonable
to expect labour, m a w^orld in which it i^oiinally functions exe-
cutively under direction, to evolve ellxtive seU -organisation as
the regular thing. Moreover, it is to be added that, even intra-
industrially, the dovetailing of seasonality is largely wanting Mn
the case of low-grade laboni for the satxie kind of reason, namely,
that it pajs the organiser inadequately. •

For this envisagement of the problem much evidence will be
found in the book before us, and much other matter relevant to
it. The trades examined are the tailoring trade in London, the
trade of the waiter, the cycle industry, the gas industry, , the
London millinery trade, the skin and fur trades, the boot and shoe
trade, and the building trade. The case of the waiter is admirably
analysed by Mrs. Drake. It :s shown that ‘*in the hotel or
restaurant open only for a few months in the year, the practice
for two or more separate establishments to be under the control
of a single management/* so that one fashionable season may be

121

191S3 WBBB AlJl) FBBBMAKt SEASONAL TBADES

(Jovetailed mto aiiother, since “tl\e su(3ce$s of a fashionable hotel
or restaurant made or marlred ^he quality of the personnel ’*
(of the waiters)* and in this way a permanent staff of waiters may
be kept. In short, there extensis^e and costly inter-indus-
trial organisation for the purpose of dovetailing seasonality
because it pays. As a result pf this and of the mobility qS fne
migratory waiter* “the waiter who ^caters foi the most seasonal
class in many ways suffers least from seasonal causes. “ Inci-
dentally, it is interestijig to learn that “tip” means T.I.P. (to
improve promptness). The nost complete study in the book is
Mr. Popploweirs, which ha.^. nioreover, the merit (from the point
of view of the realistic economist) of containing much valuable
information about the economics of the gas industry apart from ,
its seasonal features. \s regards seasonality, the deg'*ee of which
has docliiieu owing to the i^rodnctive use of gas, its cause, we
learn, is that prodi’ction and consumption must go hand in hand ;
and the latter, of course, is greatest m the whiter. But yardmen
are busiest in the summer; consequently, soiiKithing has been
done to cancel out seasonality by putting some retort-house opera-
tives into the yard as spring comes on. Another method of
reducing the damage caused to the business by discontinuity of
work is, it appears, to shorten the shift in retort-houses in the
sum ner. This plan has been tried at some works with marked
success. It is significant that, to a noticeable extent, the seasonal
variation of employment in brick-making and gas-working, w^hich
were inversely related, got to be informally and loosely fitted
together; but, with the transformation of brick-making into a
machine industry, the jointing gave w^ay. Consequently, most
periodically employed gas-workers to-day have to fill in their time
with casual jobs of the disorganised kind.

* The fur trade, which appears ’to contain a large unsolved
problem of seasonal unemployment, is another of the occupations
treated in the book about which little information has been pub-
lished elsewhere in an accessible form. Miss Bourat’s mono-
graph, which covers the ground to some extent historically, is,
therefore, doubly welcome. Of the many notable points in other
essays the limits of space prevent any discussion.

The detailed inquiries are introciuced by Miss Poyntz in a
lengthy essay on general lines. It is suggestive and thoughtful on
the whole, and reveals acquaintance with the facts, but it
ocxxasionally irritates by undue depreciation of the classical
economists and “orthodox” theory, and by bias. It is not
sufficient, in noticing the Majority Eeport of the Poor Law Com-

122

THE ECONOMIC JOOBNAt

[mahcjb

mission with regard to unemployment merely to repeat the
Minority Report^s pronouncement that it is “even more inade-
quate and reactionary than with regard to the Poor Law/^
Again, it seems to the reviewer as unfair to allege that “the
Manchester School (which is taken to include Adam Smith and
Ricardo) regards with blind optimism the sufferings of the victims
of their (sic!) system,” as it is incorrect to say that Marx's “idea
of the importance of the reserves of labour as a source of unem-
ployment, though much amplified and corrected since the time of
Marx, still forms the keynote of the best analysis of the subject.**
Miss Poyntz’s failure to apjireciate that correction has altered
Marx's theory out of recognition becomes comprehensible when
we find her attributing much unemployment to “the necessity
(under the competitive system) for the maintenance of reserves
to meet all fluctuations.” But we all have our obsessions.

S. J. Chapman

Die Formen deft wirlschaflUcJicn KnmpjcH. ]^y G. ScnwiTTAU.

(Berlin : Julius Springer. 1912. Pp. 'iOO. Price 12 marks.)

Rome excellent work is, as we know, being done by Russian
economists. The name of Turgan-Baranowski, for example, has
long been associated with the theory of crises, and his are not the
only researches that are of first-rate importance. The latest study
that comes from Russia is true to the best traditions of scholar-
ship in that country. It is from the ])en of one of its younger
scholars, J)r. Rchwittau, who is a lecturer at the University of
St. Petersburg. He has taken industrial coiiflicts as his theme,
and the fullness of his treatment deserves the highest praise.

We like his methodology : the book has been carefully planned
and as carefully executed. Jhdustriol conflict at once raises the
question, Conflicts between whom? Between social classes, must
be the answer. But what constitutes a social class? The author
goes very thoroughly into the subject, tracing the history of the
concept as far as one can from the Physiocrats and Adam Smith to
Seligman and Nicholson, and, of course^ to Karl Marx. Inci-
dentally, Dr. Schwittau calls attention to the difference in the
8tandix)int of the Physiocrats and of Adam Smith in regard to
social classes. The former divided society into groups from
the point of view of production, while the English writer in his
scheme based the analysis on distribution. Altogether this part
of the volume shows a mastery of the subject, and should prove
very useful as a summary of doctrine.

123

1933 ] FOBMEN DBS FIBTSCHAiSTl4lCHBN KAMPFES

All this introductory matter, but withal very necessary for
a proper understanding of the main i^sue of the book — a study of
strikes — to which fully a third of the space is devoted. Nor is any
aspect of the subject overlooked. The psychology underlying
strikes, the organisation of ^strikes, the practice of picketing, what
the law thinks about industrial conflicts, and much more that Is
germane, — all receive attention. But the most interesting section
is that which deals with strike statistics. Dr. Schwifctau is quite
emphatic in his declaration that the German method of collecting
materials is far inferior to the ^.nglish. The Board of Trade has
special Labour corresjiondeuis vhose busiiiess this very important
work is ; in Germany it is placed in the hands of the local police.
Further comment is needless from the point of view of exact
statistics. As for the ideal system of strike figures , Dr. Schwittau
suggests a B. beme which should find general support. To begin
with, there soould be a clear delimitation of the strike unit —
either the area affected, or the industry concerned, or the par-
ticular business or factory where the trouble prevails. In any
event, it should be perfectly plain. Next in imj;x)rtance is the
duration of the strike. In England, for example, no statistics
are compiled about strikes that last a shorter f)eriod than a day,
though in America even strikes of such brief length are noted and
consiiered (since 1901). As for the number of strikers, a few
accompanying facts should always be^given — e.g,, sex, and whether
organised workers are concerned or not. The length of the con-
flict is, of course, a necessary fact ; so is the cause of the strike,
and last, not least, what the results were — a question manifestly
difficult to determine! It w’ould be a boon to economic science
all over the world if it were possible to come to some agreement
about one general method of collecting and publishing strike
statistics.

An interesting accompaniment of the grow^th of trade union
influence is the resort to the boycott and the institution of the
label, two topics which have not hitherto received much attention.
Dr. Schwittau treats of both very fully, giving not only a descrip-
tion of each, but also a consideration of their effectiveness. Both
in England and in Germany the label is not so w^ell-known as in
America. In England opinion among trade unionists seems to be
divided upon the subject. Nevertheless, the trade union label is
to be found in this country ; we have ourselves eaten bread which
bore a label attesting that the baker was a good trade union man.

A thorough treatment of industrial disputes must take cog-
nisance of the organisation of both sides. This Dr. Schwittau

124 T&B BOOKOUIC [UABOK

does. His study of masters’ orgaiuuatio^is is no less thorough
than that of the men’s. Finally, he devotes a good chapter
tq the settlement of disputes, and this particular section is
distinguished by the illustrations drawn from the experience of
Victoria, New Zealand, and Canada, dn the rest of the book the
author limits himself to the conditions prevalent in England,
O-ermany, and the United States, conditions which, so far as the
first two countries are concerned, he has studied at first hand on
the spot. For the third he has had to rely on printed material,
but so wide has his net been that he has swept in pretty well
everything of significance.

Tins leads us to the last remark as to literature generally.
No less than thirty jiages are needed to give a list of the sources to
which the author has referred. We may say that it will form a
worthy adjunct to the excellent bibliography in Webb’s History
of Trade Unionism, including as it does works m four languages
(English, French, ' Gei man, and Eussian) The book was
written originally in Russian (1910), and was then translated into
German (1912). The translator has perfotraed his task satis-
factorily enough, but there are numeious printer's errors which
should be removed in the next edition. We cannot give a com-
plete list, but such small slips as Geoige 111. without the initial
capital, Weeb, or Ben Tilled, should certainly bt avoided.

Industrial Warfare: the Aims and ('hums of Capital and Labour.

By Chakles W'Itxf'v and Jami:s a |jirrLE. (London:

John Murray 1912 Pp xt353 Price 6 s net.)

We like almost everything about th s excellent book exc^t
the title. Industrial Warfare does not give at all a correct idea
of its contents, and, apart from, this, we cannot help thinking
that the sooner the practice of siieaking of industrial disputes in
terms of war is abandoned, the better. The strike is not a state
of w’ar, neithex is a lock-out. The sub-title. The Aims and
Clams of Capital and Labour, however, teally explains the scope
and object of the book, and seems much more satisfactory. As
the preface states, “Despite the universality of interest in the
Labour movement, there does not appear to exist any epitome
which may explain to the ordinary reader the exact significance
and the probabilities of th'* growing unrest. With that primary
object the authors have compiled this volume, though they
venture to hope that even the student, the politician, and the

1918r) : mBtrstcusut- wabi^abb 126

etpestt may welcome risurhi in encyclopaedio form which may
usefully mipplemen| the more detailed and specialised literature
of the various aspects the whole question*’ (p, v). This plan
has been carried out very successfully. The book is, of course,
almost entirely descriptive, and the authors have contented them^-
selves for the most part with a bare statement of facts, abstain-
ing, except in one or two places, fro|n any argument or criticism.
Generally speaking, what little criticism there is appears emi-
nently sane, e.gf., the view taken in the Intiodiietion of the causes
of labour unrest. The aims and aspirations cf both employers and
employed are very clearly and laiily explained, the information
given is well arranged and put into very readable form, and the
book is, as far as we are able to ]udge, remarkably accurate.

The main body oi the book consists of ien chapters, vi-xv
inclusive, wKi ‘h deal with the relations of labour ‘"nd capital in
most of our mdustries. They contain information as to the
amount of capital involved, the profits obtained, the wages
earned, the hours of labour, &c., in th particular industry under
discussion ; while a careful account of the causes which have led
to recent disputes, as well as of the way in which these disputes
have been conducted, is given in the chapters dealing, e,g , with
the railways, transport workeis, and mines. At the end of each
of these chapters dealing with particular trades there are a few
paragraphs which may perhaps he described as a sort of industrial
Who's Who, giving a short account of the princi])al tiade union
leaders, as well as of the leading figures amongst the employers.
Besides these chapters, the book contains amongst other things
a good statement ot the views of the employers, of labour, and
of the public respectively, as to the remedies for labour unrest,
ajgood account of the extent of co-partnership and profit-sharing
in industry, and a useful statement and explanation of legal
rulings, especially in connection with trade unions.

Satisfactory afe the book undoubtedly is on the whole, there
are one or two weak points, slips, and omissions, which may be
noticed. We cannot agree with the authors when they say “a
general increase in the' price of commodities rarely affects the
very poor” (p. 7), or “there has not been much increase in the
actual cost of living in recent years ” (p. 280) Nor do we think
it is tru9 to say that trade unionism is now reconciled to co-
partnership (p. 238). Surely more than 884,291 trade unionists
were represented at the Congress in 1912 (p. 23), and why is
th^re no mention of the Children Act of 1908 in the summary of
labour legislation (ch. xxi)? These are, however, defects which

126

nm ECOKOMtC jrOtTBkAL

[umm

shonW not detract greatly from the usefulness of the book, which
ought to do something towards removing the many prejudices
and misunderstandings prevailing among the working classes with
regard to the position of employers in industrial qaestions, as well
as the strange and widespread misconceptions which still exist
among other classes as to the aims and aspirations of labour.

H. Sanderson Fueniss

Provincial and Local Taxation in Canada. By Solomon
Vtnbbero, Ph.D. Columbia University Studies in Political
Science, No. PJ8. (Longmans Green and Co., and P. S.
King and Son, 1912. Pp. 171. Price $1.50.)

The medley of existing taxes in C’anada, comprising at once
the most primitive and the most advanced forms, can only be
properly explained in relation to geographical and historical con-
ditions, and to constitutional development. Ur. Vineberg has
carried out the task with great care and thoroughness, reducing
a chaotic mass of detail into intelligible order and interesting
form. The hopeless laihire of tlie personal property tax is well
distinguished from the similar situation m the T'nited States by
the comparative ease and raj>idi1y of ihe movement towards
reform rendered possible by the absence of such constitutional
restrictions as make progress so difficx-lt in that country. An
interesting point that is well made is the dynamic influence of this
tax in discouraging the giow’th )f tlistributmg centres * Vvmnipeg
abandoned it and reaped tlie advantage of jrjer present economic
position, while Nova Scotia and Bruiiswick are “growing

restive under a system which gives ar advantage to their com-
petitors in Quebec and Ontario, “ the latter giving the tax ^up
chiefly through agitation based upon a similar grievance. Busi-
nesses which do not carry large 8tcck^ but w^hich haye large
annual returns are, of course, unduly favoured*.

In his ideas of reform for the business tax, corporation tax,
and other imposts, Ur. Vineberg sees always the complete income
tax, but it IS always “not yet“ — “a sdnse of public morality”
and perfection of administrative machinery must first be
developed. As an improvement upon the present business taxes
he suggests a system which is not an income tax, but which is to
yield the same results — a presumptive form scientifically deter-
mined. In each class of business the ratios borne by the rental
value (of premises occupied) to profits are to be sampled and
averaged. It is presumed that a well-defined mode is anticipated,

1918] ItBICBOBlSf: BBS fINABCBS OITOMANBS 127

rather than an average. The result will be ip index number
applicable to all rente in the eam^ business, so that a tax may
be levied upon the ren*, thus weighted, to give a result like a tax
on promts. If businesses tend lo similarity in size, are so narrowly
distributed geographically that the pure economic surplus ip
rental value hardly varies, present stable results in relation to the
time-element, and also have little scrpe toi the personal element,
such a presumptive system may give a rough approximation. But
on our side we are ^ruck tuitb the idea of taxing cotton profits or
a financial agent’s income on Liiesej lines' That an inquisitonal
income tax is objfctionah'r ()t''ause it nial'os it “impossible to
conceal a lean year,’’ wcild also be a somewhat refieshing point
of view for our officials. The Canadian jirobl-un is bound up with
the necessity foi central co-ordination and conference, for the
scientific elab«)ration of corporation taxes, and for '■dministrative
arrangemet.ts to prevent overlapjung and duplication. “Let
benefit enter in to designate the authority fo which the tax is
to be paid, while ability shall determii'-'' the amount payable,” Is
the author’s wise saying, and Hs force iS by no means limited to
the problems of the West.

J. C. Stamp

Les Finances Otiomancs. By A. TTuthborn. (Vienna and
Leipzig; C. W. Stern. 1912 Pp 295.)

This ambitious Realise on public law and adrainistiution in
the Ottoman Empire is planned in four volumes, of which the
above is the second, dealing with Finance. The first has already
won golden opinions for ios comprehensiveness ; it treated of the
sources and principles of Turkish legislation, of the head of the
State, of nationality, and of justice. Let it be said at once that
its companion vohime is in no respect behind the first in the
minuteness of its details. One would have expected a book of
this kind to be a little dull. Headers will hardly find this to be
the case throughout, for the historic notes on the different sorts
of taxes, and the general comments on their effects, serve, here
and there, as a welcome contrast to the facts and figures which
the pages contain. Nevertheless, when all is said, the book is
for the specialist, and he will find it invaluable.

In a country where there is a Government , but only a minimum
of government (for as long as the provinces pay their taxes
regularly the central power is very slack), a consideration of the

128 HIE BOOSOSIIC JOTTBUAL [MABOa

^ If

fiuAijoes of the State cannot but be of groat interest to the poU-
tioiftn and the l^onomist. The first thing that strikes the reader
of M. Heidborn’s pages is the wastefulness in the collection of
revenue. No less than twenty-^e separate offices were con-
cerned in gathering in the income of the State, and the*amount
of leakage on the way may be well imagined. Gradually, how-
ever, as Turkey came more ^nd more into contact with the modern
European State-system, Turkish administration took on a new
aspect. It was so in justice, in education ,'*'in finance. And at
the present moment the finances are managed by two independent
bodies, (1) the Council of the Administration of Public Debt,
established in 1881, and (2) the Ministry of Finance. The latter
is in a hojieless state of chronic bankruptcy, and though the new
regime of 1908-9 did, indeed, attempt to improve matters, in a
land like Turkey improvements are slow of realisation. One of
the wisest provisions of the reforms was the establishment of a
School of Finance ‘in 1910 for the education of Treasury officials.
Another step in the right direction was the mstitution of a budget
on modern lines, wherein the items are classified in the most
approved method of the best German text-books on Public
Finance. Glance at the last two or three budgets and you will
find the revenue of the State dnided into eight sources: direct
taxes, including tithes; stamp dues: mdiiect taxes; monopolies;
State undertakings; State domains; (nlmtc (from Egypt, Cyprus,
Samos, and Mt. Athos) : and ni'scellaneofis revenues. It is not
always easy to obtain (he opnortunitj of studying an analysis of
the Turkish budget ; ]\I Ileidborn has simplied full tables for
the budgets of 1910-11 and 1911-12. *

In both cases a striking fact is tlie proportion between direct
and indirect taxation (about two to one). The greater part of the
former is furnished by the heavv tithes, which are in effect
taxes on the jiroduce of the soil as well as on farm animals.
M. Heidborn does not deal with the effects of. taxation ;' hie task
is to set forth financial practice as it is. Otherwise he would, no
doubt, have called attention to the seriousness of the burden
which the tithes (the so-called vchur) place on agriculture,
stemming its healthy development. Equally striking is the
contrast between rural taxation (yielding in 1911-12
j 6T10,902,820), and urban taxation (^Tl ,645,498). For some
illuminating comments on this inequality, as for an excellent
account of the fameitu, or income tax, we would refer the student
-to M Heidborn’s pages.

129

191dj FBIDBOBK ; BBS 03T0MAKBS

> <« ' ’ , ' '

The thurd division of the book is devoted to the Ottoman
public debt^its appearance in 1864, its growth since then, its
administration al the piesent time. We have carefully compared
M. Heidborn’s treatment of this subject with Sir Adam Block’s
recent report, and we can only say that it is admirable. ^ *

M. EpstbIn

Np. 89.— VOL. xxiii.

NOTES AND MEMORANDA

Notes on Wages and the Cost of Living in South Africa.

In South Africa occupations are, in a general way, as varied
and complex as they are at home, but division of labour has not
been carried out to so minute an extent. A mason, for instance,
in South Africa might find it necessary to have some knowledge
of brick-making, joinery, and of machinery; a carpenter would
be expected to know something about wagon-building, and a
blacksmith is often called to do some fitting or engineering work.
That is to say, occupations or trades are not so definitely marked
as at home, and experience of woik is more general.

Speaking broadly, w^ages in South Africa are higher than at
home in all trades and occupations, owing mainly to the differ-
ence in the supply of skilled labour. The average wage,; for
example, of a good bookkeeper ranges from £15 to £25 a month
in a moderate sized business. This in turn reacts on the unskilled
labourers. The presence of a coloured race, moreo vr-i , undeniably
gives a higher value to the labour of white men. This has an
important effect on indigency, and makes poor white’s problem
quite diffei'ent from the unemployed and out of work question
at home. It means that those unskilled white labourers, who,
through no fault of their own, fail to maintain themselves iij the
aristocracy of labour w^hich is theirs by right of colour or eificiency,
fall far below the level of the doloured race. If a white man at
any occupation can command only the equivalent wage of a Kaffir
in the jnines, for instance, his case is pitiable in the extreme.
For the Kaffir on his wage is rather comfortably off ; he needs
little clothes, and these he buys secondhand, and his food is very
inexpensive; his amusements and luxuries are very low, while
in addition he probably has a plot of land around his kraal at
home, and this is worked by his wives. He resorts thither at
intervals to rest ; his income is supplemented in this w^ay. The
white man, confronted with the high cost of living and his different
standard of life, is badly off, A third element that conduces to
high wages is really an extension of the first, yet different in

MABOH, 19131 WAGES And cost Of LIVING IN SOUTH APBIOA 131

its application. A large percentage cf the skilled workers in the
mines hail from the old country ; and most of the expert engineers,
draftsmen and surveyors have been imported for their particular
branches of work. These men having left home and home com-
forts must be compensated by increased wages for their loss of
home privileges. This element of sacrifice ot comforts enters
largely into all calculations. \ man before going abroad as a
colonist generally weighs up whether it is worth his \vhi!e, from
a mercenary point of view, to h a.ve home, fnends, and prospects
for a position in the new ecantry. If he sees |hat the hiirher
wage obtained will enable him to save more ceteris paribus ^ he
is better off. 8o this element of being able to Srave more enters
into prominence.

Some high wages paid in the mines are, as at home, due
to the charaotvir of the labour and of the work, apart from
supply and demand. Some types of labour ‘arc dangeious and
the mortality great. In the gold mines pneumonia and phthisis
are caused by the fine dust which the miner encounters in drill-
ing the rock. These diseases may or may not b^preventod, but
the fact that the danger exists enters soincwhat |ato the money
price paid for the labour. The wages in the goldmines on the
Rand are greater than the wages in the coalmines. A miner’s
wage in a gold mine averages daily from 21 rS*. to 35s according as
he works by shift or by contract. It is rare that an actual coal-
miner gets 205. a day. The average in the Natal mines is lower,
and lies between 145, and 215. per diem. The average wage of a
carpenter, bricklayer, 'fitter, or the like is 205. a day; and while
the man is single he can save about 8s, out of this and live well
on the remainder. But for the married man in Johannesburg to
keep a wife and family on 205. per day is not an easy matter at
the present scale of prices. Certain firms in Johannesburg
discourages marriage among empfoyccs earning a salary of under
50300 a year.

In the early days of the mining industry the farmers of the
Transvaal were able to supply mealies, meat, eggs and vegetables'
to the mines, and got very good prices for them. This local
market proved a great imi>etus to the farming industry as a
whole, but after the junction of Johannesburg with the Cape by
rail in 1892, and subsequently wdth Natal and DelagoaBay, great
quantities of food were imported from overseas, and the farmer
temporarily lost his control over the market. Incidentally it
tnay also be noted that the appearance of the railway threw out
of employment a vast number of transport riders, as previous to

K 2

132 THB BOONOMIO JOXJENAI. [MABOH

this all goods, foods, and merchandise, machinery, &c., were
carted to the mines by wagons. The competition for a time
paralysed the farmers and dislocated the supply of labour. They
received a further set back owing to the war, which disorganised
them and dislocated the supply of labour. During this time most
of the necessaries of life wqro imported to Johannesburg, Pretoria
and other towns, by rail from the Cape and England. However,
the farmers latterly are making use of the market at their doors,
and soon a time will come when they will be able to supply
practically all that is necessary apart from luxuries.

A general examination of retail prices of food sold to-day
at Johannesburg shows a difference of from 50 to 100 per
cent, in price as compared with the prices of similar articles in
England. This difference is due partly to the greater cost of
production and partly to the high prices obtained for other articles,
such as clothes, i'urniturc, &c. For the prices paid for these
articles tend to affect prices of food by the general economic
levelling up which takes place ; the baker and the market gardener,
having to pa^f the high prices demanded for the other articles,
raise prices accordingly. A characteristic instance of this occurred
to the wTiter |hst after landing at Capetown. After the monotony
of life on board ship, a glass of milk was thought to bo a delicious
beverage, for all milk on board was sterilised and not very palat-
able. Sixpence was charged for a glass t^'hich at home would be
easily procurable for a penny or twopence.

Coming to conventional necessaries, there is a great variation
of prices according to the article in qucAion. It must also be
borne in mind that out of a total iin|X)rt in 1909 of £27,000,000,
£6,000,000 were articles of food and drink; and in nearly all
cases there is a tax on these articles. Therefore the prices obtain-
ing throughout South Africa differ materially from those at
home, not only by the extra cost of freights, but oiso by the
amount of the duty. And as happens in nearly all protected
countries where food and other necessaries are taxed, the prices of
luxuries and amusements are correspondingly greater than in
those countries where the former are not taxed. This is simply
an illustration of the interdependence of economic facts; we
cannot raise the wages of the plasterer without at the same time
affecting the wages of the carpenter. Crockery, articles of decora-
tion, sweets, paintings and fixtures are from 50 to 200 per cent,
dearer than at home. Tobacco, a conventional necessary, is
oheaper, as a great deal is grown in the country, but if one wants
English tobacco one has, of course, to pay more for it* Beer,

1913] WAOBS ANP THB COST OB I,rmO IN SOUTH AFRICA 133

lemonade, dkc., are all 100 per cent, more than at home, also
prices of admission to theatres and other places of amusement,
items which are really imi>ortant factors in a town-dweller’s
expenditure.

But the greatest difference in the cost of living in South Africa
as compared with home, especially in the towns, is undoubtedly
rent. This factor stands pre-eminent. It in particularly so in
Johannesburg axid Pretoria. There are three main causes for this ;
firstly, the high value attached to the land in and near the gold
mines; secondly, the scarcity o! houses ; thirdly, the cost of labour
and material. People at first, were too much engrossed in digging
or speculating for gold lo trouble about building houses. The
dominating idea was co Uiuke uioney and get away. Again,
materials and labour being high, houses could not bo put up at a
small cost, rJince 1V#08, in and around the big towms of Cape-
town, Johanrcsburg, Pretoria, and Durban, with the advent
of tramways, suburbs are springing into exisfence, thus bringing
cheaper land and healthier surroimclings within reach of the
townspeople.

To-day the building trade is very flourishing in all these districts
and houses are being built remarkably quickly. This tends, of
course, to lower rent and to bring a healthier tone to the
munkipality; but even now" prices are high. Tw"o rooms, very
small and unfurnished, 8 feet by 10 Jeet, and 10 feet by 12 feet,
two miles from Ihe market square in a poor quarter of Johannes-
burg, fetched £5 a month. Tn the same quarter there were two
rows of w^orkmen’s cottages with four rooms and a bathroom, but
no kitchen, at £6 10«9. a month. These, too, in a dusty, very
dirty part of the town, quite near to the mines. In the suburbs
a four-roomed house with kitchen and bathroom, suitable for an
artisan, was obtainable for from £8 to £12 a month. In the
country districts rent is, of course, lower, and a house of the
latter description, •with a good garden, at a place like Vryheid, in
Zululand, ranges from £4 to £7 a month.

Mr. Aiken, in his report before the British Association on the
“Cost of living in Johannesburg,” says : (1) A brick house of four
rooms and a kitchen costs as follows : —

Materials.

& s. d.

House, brick, stone, and

mortar 142 17 0

Imported wood and iron
gates and furnishings... 150 15 1

£293 12 1

Lahoiir,

£ s. d.

Skilled 194 14 0

Unskilled native 44 7 0

£239 1 0

THE ECOKOMIO JOUBNAL [mABCH

(2) For a brick house of three rooms, kitchen, and bathroom, the
total cost would be a little less, viz., J6495 '16$, Sd. A wood and
iron house costs less. The estimates given are contractors’ costs,
and in ordinary circumstances the costs to a proprietor, not a
builder himself, will probably be at least 10 yiei cent, higher.
This is to say a house of No. 1 description would cost ^585, of
No. 2 descrijjtion £646. The value of the ground would be on an
average £200, and in some cases much more. Thus, from the
above, the total price must be £785 for No. 1, and £746 for No. 2,
on which a rental of £96 to £144 per annum is charged.

Comparing above with figures given in the Board of Trade’s
report, Cd. 3864 (1908), we find the average English artisan
pays on an average from 4.*?. fid. to 5.<?. 6d. a week in the case of
four roomed, and 5s, fid. to C)S. fid. in the case of a five-roomed
house of this description. Thai- is to say, at the most, about
£16 18.9. a year, as compared wdth anything from £60 to £96 and
£144 per annum in 'South Africa, prices varying from country to
town.

There are one or two other items which it would be well to
note under this heading. The first is the cost of travelling. On
the railways there are only two classes, first and second, third
being usually reserved for natives. Generally speaking, every-
one who is anybody travels first, and only the lower middle
class travels second. .Distances are greater and far(‘s dearer than
at home. Certain concessions are mude for long distances and
return fares, seavson holiday ticket, fe. , Init even then the cost is
great. A return ticket from Viyheid to Johannesburg (622 miles)
costs £5 first class. The railways of the whole of South Africa
are now under one management: thev are owned by the State,
and in the past they liave been worked at a large profit ; naturally
it has been pointed out that this is an indirect form of taxation.
Since the Union great economies, have become possible, some of
which have already been carried out, while others are pi'omised.
As is natural in a country where high wages are general , holiday-
making is proportionately expensive, as distances to the coast are
very great, and the cost of accommodation is generally dear.

Another clement is the cost of education. Primary education
in the Transvaal is free, but not in Natal and Cape Colony. Under
the Union it is proposed soon to make education free and com-
pulsory. Great strides have been taken by Natal, which is
pushing ahead rapidly ; but even so there are only a few good high
schools, and these are expensive, as the pupils in the country
have to travel long distances and pay for board. Books and

19131 WAGES a.ND THE COST OF LlVIx^G IN SOUTH APBIOA 135

stationery, too, are very expensive ; in our opinion too much so
considering the fact that they are imported free of duty. The
booksellers must be ma^^ing more than a fair i*emunerative profit
on their sales. For example, all the Is net books in the Every-
man or World’s Classics are charged l5. OJ. here, except at
the coast towns and in one or two placets in Johannesburg, where
they are 1^. 3J. On books which are W)t ne^ the increased charge
is often much greater.

It will be seen on examining tlie import tod erport lists of
South Africa that the country .4^ yet does not pioduce sufficient
articles of looJ and drink for itbeil ; the mnjn hulk of its energies
K devoted to mfniug and not to manufactures, which therefore
njust be imported It naturally foliou« tliat these wull be dearer
than di home, u hence ii}ost ol them eome. In additivm to the
cost of freiglr. thither, must be rt^ekoned the tanff, varying
according to dith'reut artieU‘s, on all luanufactures.

Following the method passed by the Indigency Keport of the
JVansvaai for 1908, cerlain eomparativ-* hgures for the cost of
living can be obtained to give a general ivlea ot the difference in the
cost of living of the working classes in both countries. (The
basis of comparison being the report of the Board of Trade, (VI.
3804, 1908.) The figures given in the rei>ort are based on the
working-class budgets of 1,944 families in 72 towns, whose weekly
w^ages vary from 20.9. a week to ov^r 50.9. The average wages
of properly qualified artisans in sueh trades as the building,
engineering, furniture making, and printing tiades, are between
30.9. and 42.9. per week, and the tvages of their labourers and
assistants vary from 18^. to 27.9. per week.

Taking first the case of the qualified artisan wdiose earnings
amount to 35^. to 406’. a v\^eek, an examination of 292 eases m
England show^s that on an average each hnmily earns 36.9. OJdf.
per week, that the number of children is 3*4, and that 22.9. 3d. is
spent in food |>ernveek, viz., 00 per cent, of its income. The
average weekly diet consists of the following articles : —

10 iba. Flonr
„ Bacon
16 , , Potatoes

i ,, Coffee
12 Eggs

20 lbs. Bread
J „ Clieeso
2l „ Rice
„ Sugar

2i ,* Tapioca and
Oatmeal

lbs. Meat
2 „ Butter

i .. Tea
lOj pints Milk

To these must be added a certain quantity of vegetables, jams,
currants, and condiments, costing on an average 3^. per

week, under ‘‘Other Costs” heading.

By calculating the cost of these articles of the same quality in

136 THB EOONOMIO JOUHNAI. [JTAROH

Johannesburg and the rent, we get at an approximate comparison
of costs at actual figures.

Artisan class, per week : —

London. Johannesburg.

Food

. . 25

Sis. 9\d,

Rent

... c6

255. to 405.

Other cORtf? . . .

185. Id,

Total

... 39

785. to 935. 4i<2.

Thus these totals represent the weekly expenditure in London
and Johannesburg res]>ectively. An artisan, therefore, in
Johannesburg w^ould require at least from £16 to £20 a month
in order to live at the same standard in the matter of food, style
of house, clothing, &c., as he would require if living in England.
As the standard of life is somewhat higher in the Transvaal this
figure is somewhat low. Thus the cost of living is almost exactly
double on an average. Taking the efficiency as being equal, his
labour is probably over three tunes as expensive wffien w^e take
into consideration the standard of life and comfort.

It is unnecessary to compare in detail the weekly budget of the
labouring class, for in reality the white unskilled labourer, as a
class, is at present hardl> existent. Large numbers, if not the
greater number, of unskilled labourers in England get less than
21.9. 4(1, per week. The labyurer m Johannesburg, say, living at
the standard of the English labourer, would recpiire about £8 a
month if he lived m a cheajj two-roomed house (non-existent at
present), and up to a month if he Jived in what would be a
respectable house.

The cost of liv^ing is of course considerably less in country
towns, mainly owing to the difference in rent. In the case of
groceries the variation from Johannesburg prices is small; in
fact in countr>^ towns it w^as found that groceries cost more
because, though Ihe railway and freight charge would be about
the same, the turnover w^as less; competition and large turnovers
in the big towns tend to low^er prices. Johannesburg prices are
highest in meat, country prices from 15 per cent, to 20 per cent,
low’er. Milk is 30 \K^r cent. chea])er in the country than on the
Band. Eggs 40 per cent, lower in the country than in Johannes-
burg, bread is nearly the same in all towns, but in some country
places it is up to 15 per cent cheaper. Taking rent, food, and
coal together, the cost of living in Pretoria, Pietersburg, and
Vereeniging is from 8 per cent, to 12 per cent, less than it is along
the Band, while in other towns on the Transvaal it is from 15 to

137

1913 ] A NEW HISTDBT ON THE POST OFFICE

20 p©r cent, cheaper. In rural districts the cost of living is on
the whole considerably less. A fair idea may be obtained as
follows : board and lodging for single men in the country costs
£6 10s. a month, including washing ; the same type of room and
food in Johannesburg would cost from £9 9s. to ,fl0 105. per
month. In the coast towns the prices vary from £7 to' £8 lOs.

J. Morgan Rees

A New Historv of the P(»pT Office.

A SYSTEM of Posts Vas existed in this country for nearly five
hundred years foi the <"(‘uveyaiice of rTovernnient dex patches,
and as a piibhc service for al»out three hundred years. It is a
curious fact that the first serious attempt to write a history of this
service was not made until about fifty years ago. At the
beginning ox the seventeenth century the union of England and
Scotland made the organisation of the T'ostal Service an important
part of Government administration. Ihe constitutional struggle
between the Crown and Parliament which followed made the
control of the Posts a matter of serious contention between the
two parties. In the first half of the century proclamation followed
proclamation for the control of Posts, and in the second half the
importance of the Post Office as a •source of revenue and as an
instrument for the encouragement of trade and commerce became
more fully recognised ; but although the journals of Parliament
and the records of the public departments were considerably
occupied with matters relating to the Postal Service, no general
writings on the subject are available for the historical student.

In the eighteenth century the revenue of the Post Office
increased rapidly, and attention was more and more turned to it
as a source of supplies in support of the wars in which this country
was engaged, the*rates of postage being increased by successive
Ministries. The extension of the system of Posts to meet com-
mercial requirements also obtained much attention, although
perhaps more in the interests of revenue than of the welfare of
the country. Members of Parliament took a steady interest in
the franking privileges which they enjoyed, and to such an extent
that the interval between one Parliament and another caused a
marked increase in the postal revenue of the year. Nevertheless,
no history of the Post Office was written, and in those days public
departments gave no account of their proceedings in annual
reports.

138 TWB ECONOMIC .TOUBNAL [MABOH

The taxation of correspondence for the purpose of raising
revenue reached its culminating point in the early years of the
nineteenth century. So long as the struggle against Napoleon
continued the nation bore its burden patiently ; but when peace
came and the commerce of the country increased as if by magic,
while at the same time the use of machinery enormously increased
the power and range of manufacturing industry, the demand for
a cheaper and more general system of communication grew
proportionately. It was so difficult, however, to transform a
Postal Administration which had long been organised as a
machine foi raising revenue rather than as a means of meeting
public re(juirements, that an almost revolutionary outburst of
public opinion was necessary to secure the introduction of penny
jiostage. Even then there was no history of the Post Office
available for public information, and the Department was known
only as it affected the daily life of each individual.

In 1844 attention was called in Parliament to the opening in
the Post Office of letters addressed to Mazzini and his friends in
this country under the authority of warrants from the Home
Secretary, and a serious public agitation followed. As a result
Committees “of Secrecy “ were a.]>)H>intcd by both Houses of
Parliament to inquire into the aiitliorily for the practice and it
became necessary to investigate its liistory. The control of Posts
as a safeguard agaijist foreign enemies and domestic agitation
was, however, a principal object of th(' }>()licy of successi''^e Govern-
ments during the sixteenth and seventeenth centuries, and the
inquiry practically lu'camc the liisiory of the Post Office

as a Department of Governiueni.. '[’he report of the Com-
mittee of the House of (Vmimons gave a geiicral sketch of the
struggles for the control of the Post Office in the reign of
Charles I. and under the Commonwealth, and this sketch \vas
illustrated by an Appendix containinr: a large number of historical
documents consisting of patents and warrants, ^proclamations and
Acts of Parlianumt relating to the Postal Service, as well as
numerous extracts from the journals of the Plouse of Commons
from the reign of Henry VITT. to the year 1837. This collection,
which was chiefly compiled by Sir Francis Palgrave, then Deputy
Keeper of the Pecords, has been the source from which subse-
quent writers upon the early history of the Post Office have drawn
most of their materials. Tt is only in recent years that other
sources of information have become available in the numerous
calendars of State papers.

first annual report on the Post Office in 1864 contained

1913] A saw HIBTOBY OF THE POST OFFICE 139

a short general account of Post Office history. The report was
signed by the late Duke of Argyle as Postmaster-General, but
the historical portion ip known to have been written by Mr.
Scudamore, who afterwards became well known in connection
with the transfer of the Telegraphs. In its compilation consider-
able use was made of the old books of Post Office accounts, dating
from about 1677, which are still in elkisteiu e. Mr. Scudamore,
who was a contributor to Puncn and other periodicals as w ell as
an official, was a clever waiter, and his sketch, although very
brief, has been much quoted b> later writers.

In 1864, Mr. W. Lewi ns, an officer of the Surveying
Establishment of the Pos/ Office, published Her Majesty' Mails,
an octavo book of some 850 pages, w^hich was designed as the
first of a series of histories of the Governrrient Departments.
The other hiscorics, if written, were never pul)lish.d. In this
book considerable use wds made of the report of the Committee
of 1844, bui Mr. Lewins had also collected a good deal of
information from local histories and gu' les and directories as to
early postal rates and arrangeni''nts. The chief part of the book
is, however, occupied with an account of the penny post agitation
and of the subsequent administrative changes, of which, to some
extent, Mr. Lewins had personal knowdedge. For instance, he
was able to give particulars of the staff* and organisation of the
Post Office in his day, and to descrilj^ the growth of the raihvay
travelling Post Offices and the establishment of the Post Office
Savings Bank.

Nearly thirty years passed before the next attempt at a history
of the Post Office w as made. In 1893 Mr. Herbert Joyce, then
Third Secretary of the Post Office, published The History of the
Post Office from its Estallishmcvt doum to 1836. Mr. Joyce
was an official of long service, and probably his reason for stopping
short before the introduction of penny postage w^as that his
personal knowledg^^ of the administration of the Post Office
during his own years of service, and his training by the men
wffio were responsible for that administration during the earlier
years of the penny postage era, made it difficult for him to deal
with the subject without touching on questions which seemed to
him too confidential for public discussion. Besides this, the
description of the various new branches of Post Office business,
such as the Savings Bank, the Telegraph and Telephone Services,
and the Parcel Post, all of which came into existence during his
service, would probably have made his book too bulky. For the
practical student, however, the fact that Mr. Joyce’s history ,^ps

14P THB ECOKOMIC JOTONAIi |MABCE

shorj; at the beginning of the period when Post Office administra-
tion began to have serious importance for the student of current
social questions considerably detracts from its value, and one
cannot but regret thai Mr. Joyce, who must have known in
relation to the Post Office so many of the things which are never
written in histories, did not give us the benefit of his personal
knowledge of the history of the Post Office while it was in the
making. The preparation of this book had been a labour of love
for many years, and a good deal of its contents were derived from
an independent study of papers in the Record Office and in the
archi^^es of the Post Office, as well as from old Parliamentary
printed papers. ITnfortnnately, however, Mr. Joyce gave no
references to bis authorities, and, owing to the absence of printed
indexes and calendars of State papers, such as the modern student
has at his disi)osal, the work of research among State records
was a more difficult process than at present, so that Mr. Joyce
necessarily missed ‘a groat deal of the material which is now
available.

Mr. Joyce’s ^vork has since remained the standard history of
the Post Office, but ve have now another history produced by an
American student. The writer is Mr, J. 0. Hemmeon, and the
book is publislicd l)y Harvard University as No. vii. of its series
of Economic Studies.^ Mr. PTemnieon tells us in his preface that
his materials liave been obtained from various libraries in America
and at the British Museum. The \rork, therefore, does not go
beyond the printed records whkdi arc available for all students ;
but the study of these reeoids has becm very thorough, and their
extent is, of course, much greater now Hian at any previous time,
so that, even so far as ihe earl\ history of the Post Office is
concerned, the book is more complete than Mr. Joyce’s wwk.
We also have on every page numerous references to authorities.
In particular, Mr. Hemmeon appears to have made very extensive
use of the reports of Parliamentary Committee^'^ and Commissions
which touch on matters of Post Office history, and in this manner
he has obtained a good des\ of financial information, of which
there was little in Mr. Joyce’s work.

As Mr. Plemmeon writes for the information of the modern
student, he naturally deals to a large extent with the recent
history of the Post Office, and the greater part of his book there-
fore covers ground which was altogether excluded from Mr.
Joyce’s survey. Also as a student be is free to discuss questions

* The History of the British Post Office ^ by J. C. Hemmeon (Harvard University,
191%. Pp. xii + 261. 8s. 6cZ. net.

1918] A NEW HI8T0ET OP TEil POST OFFICE 141

which Mr. Joyce as ati official left out c£ sight; such as, for
instance, the relation between the staff of the Post Office and the
State as an employer, the history of which is brought down to
the issue of the report of the Hojhouse Select Committee in 1907.

For informs tion as to the modern administrative changes In
the Post Office, Sir. Hemmeon has^ relied chiefly on the annual
reports of the Postmaster-Greneral. lliese report;, are easily
available for students, but, nevertheless, it is convenient to have
the chief results summarised in a brief and accurate form. In
this way we get particulars of bnrh siibje.ls as the insurance and
registration of letters, 11 o express delivery service, newspaper
postage rates, book or hallpeiiny post, pattern and sample post,
postcards, parcel posi, postal orders, Post Office Savings Bank,
and annuity and assuraRCo business. There are also separate
chapters deal ng wdth the Telegraph. S>stem of the Post Office,
and the relations betwcim the I’ost Office and the Telephone
Companies, Vvdiich are based chiefly on the reports of the Parlia-
mentary Committees which have considered these questions. ]n
dealing with these modern matters it cannot be said that Mr.
Hemmeon has expressed any original views. For instance, in
dealing with the telegraphs he stops short at the statement that
their financial result has been unsatisfactory, without considering
to wliat extent the indirect benefits of an extended telegraph
system are a sufficient compensatitm for loss of reveniu'. The
chapter on telephones also dwells chiefly on the restrictions placed
on telephonic development as a result of the Government
monopoly of telegraphs. The historical facts are, however,
accurately narrated in a useful summary without any conscious
intent to influence the mind of the reader.

Mr. Heimneon gives a useful bibliography, and his book
undoubtedly provides for students a more convenient and more
complete summary of Post Office history than has hitherto been
available, although his book cannot be regarded as a final and
complete history of the Post Office. Even as regards printed books
his studies have not been complete. For instance, he has over-
looked such a book as Norway’s ITistory of the Post Office Packet
Service from 1793 to 1815, and no use has been made of the
earlier unprinted records of the Post Office which in recent years
have been carefully gathered together in the Eecord Boom at the
General Post Office. A good deal of work also remains to be done
by any enterprising student among the original papers in the
Eecord Office, of which the published calendars necessarily do
not give complete summaries.

A. M, Ogilvie

142

THB ECONOMIC JOim&AIi

[MAE0£[

The Tax Experiment in Wisconsin.

The experiment in income-taxation that is now being made
in Wisconsin is a crucial one in relation to the future of State
and Federal finance in this important sphere. Wisconsin has for
some years had the reputation of being one of the most progressive
States of the Union in its fiscal administration, and it is not
without significance that in this State also there has been the
most marked movement away from the control by the amateur in
taxation and so-called “practical man of commerce, “ which has in
the result been so much discredited in America, towards a proper
combination of academic and business elements, and a due infusion
of inductive and scientific study in public affairs. Wisconsin, for
example, has led the way in an interesting library and research
combination between the State administration and the regular
university routine, in which the resources and experience of each
side are made practically available for the other. In this State,
too, the i^romincnce of a university representative, Professor T. S.
Adams, u[)on the State Tux Commission is a notable feature.
His efforts and those of Professor Pelos Kinsman (author of the
Income Tax in the CommomceuUh of the United States) resulted
in very imiK)rtant alterations in the original pro])osals for the new
tax. When it is added tba^- the adrninistiution is nov, m the
hands of Mr. K. K. Keiman (whose valuable inductive study of
forty systems of income taxatiun was recently reviewed in this
Journal), it will be seen that nothing that expeiience and study
can suggest has been absent at the inception of the system.
Indeed, the law is highly esteemed as tin last word of wisdom and
experience, and it is stated on all sides that any failure in the
result must be due only to defects in administration. All neigh-
bouring States arc agog with attention, and will be ready enough
to scrap their ineffective j;>ersonal properly ta^fes and follow the
new system if it succeeds. Success will be a complete demon-
stration that personal x>roperty may safely be superseded by
income as a basis of State taxation, and that a highly centralised
administration is effective and economical.

The old system is not wholly abolished, but the “personal pro-
perty “ now exemjffed includes money and credits, stocks and
bonds, personal ornaxnents habitually worn, household furnishings,
farm, orchard, and garden machinery and implements ; and the old
limits of value for exemption of “one watch carried by the owner,’*
and “pianos, organs, and melodeons,” have gone. Farm animals

< 1 ,

1913] THE TAX EXPEBIMENl IN WISCONSIN 14$

dud merchants’ and manufacturers’ stock still remain chargeable,
but there is a provision that receipts for taxes thereon may be used
as cash in paying the income tax, so th'^t virtually the trader pays
whichever tax may be the highoi ! Without attempting a detailed
description of the system, we may toch upon the points of chief
interest to British students. The assessment is upon a ‘‘total
income return” in one sum according to a giaduated scale. The
family is taken as a unit, as the incomes of wife and children
are included, but whereas the '^xeaijption limit iS $800 for an un-
married individual, it is rais^^d to $1,200 f<. husband and vife, and
an allov'ance of $200 is n tor each child under eighl«*en years
of age. For each adil- ionol i^icrson for whose support; the tax-
payer is legally liabir, nnd who enfiroly dependent upon the
tax-pay^r for 3us supriort, an allowance (analogous to the Prussian
case, but not ••estricted by a total income limit) of $200 is given
These exemptions are allowed from incon^'s of ill amounts.
For individuals the graduation is not effected by applying different
rates to the varying total incomes (nei after allow’anco for exempt
sums, &c.), but by the follov^iiig method : —

The tax upon $5,000 would consist of —

1 % upon the Ist $1,000 $10*00

li% „ „ 2nd $1,000 $12*60

,• n 3rd $1,000 $16*00

» ,» 4th $1,000 ! $17*50

2% „ „ 6th $1,000 $20 00

Total tax . , . $75 00

$75.00 would be but per cent, of $5,000. The true rate varies
from ] per cent, on the first $1,000 of taxable income to 2*95 jier
cent, on $12,000, and 6 per cent, on all siiiiiH above that — the
composite rate, however, never reaching a full 6 per cent.

The return for trade, &c., in all cases is higlily inquisitorial,
since it shows the*gross turnover, and all the expenses — it is, in
fact, an abbreviated trading and profit and loss account, but on
a basis of actual cash receipts and disbursements, and provision
is made for accepting “earnings ” for a basis rather as the excep-
tion than t^ rule. So the “inventory” or items of stock at the
beginning and end of the year — so vital to the British conception
of profits — is provided for at the end of tlie return, as a mere
addendum, serving to furnish the taxing authority with the oppor-
tunity of adding any increase io the “cash ” result ; but it is by no
means clear that any deduction would be allowed for a decrease !

The annual value of a residence occupied by * the owner has

144

ECONOMIO JOTONAE

[HABCa

of course to be included as income, but, judging by the amouut of
paternal persuasion in explanatory literature that is necessary,
the idea is not yet acclimatised.

The provisions for coitnpanies and corporations are highly
ingenious. There is no attempt to apply graduation to the
absolute amount of j)rofit, ^d thus to penalise the large concern
merely because it is large, nor is the German method followed
of allow'ing an exempt percentage upon capital, but the device
adopted seeks to tap the unearned increment. If the proportion
which the taxable income bears to the assessed value ,of the
property used in making the income is

Loss than 1% the rate of tax is 1 %

More than 1%, but not over 2%, rate of tax is

»>

2% „

,, 3%

.. . 4 %

3% ..

.. 4%

„ .. 2 %

11% ..

12%

„ 6 %

12%

6 %

To illustrate by a concrete example : Suppose that a concern
has a plant assessed at $200,000, and taxable income to the
amount of $10,000. As $10,000 is 5 per cent, of $200,000, the
rate would be 2^ per cent. , and the ta^, would be $260. If the
assessed value of the plant was $-100,000, the pro):>ortion would
be per cent., the rate 1| per cent., and the lax $150. If the
assessed value of the plant was $50,CK)0 the proportion which the
taxable income bears to the assessed the property would

be 20 per cent., and the rate of tax would be 6 per cent.

The general object is to adjust the rate of taxaiion upon cor-
porations to their earning power lint such earning power is
based upon tlie relation of the taxrble income to the assessed
value of the property owned by the Company in the State, ^and
actively used and enji>loyed in the acquisition of such income.
Thus the rate paid bears no direct relation to that for individuals.
In so far as “assessed values ” are fixed on a cost basis, or by a
unit method such as superficial area or “so m^h per spindle,**
the method may give logical results, but in so far as market values
and the element of “earning power ’* enter into them, the method
moves in a vicious circle, and only transitory su^luses will be
touched, for they cease to futoish an indej^endeOT criterion by
which profits may be judged to be large or small. Like other
attempts to find an independent “faculty** in ju-ofit-dividing cor-
porations, this tax will act as a differential favour (in the share
market) on stocks of low yield, and conversely a burden upon
those of h kJuyi eld.

WIS] Tim TJA 14S^

The jamijigemeBts dmdiag tb© profits of coBcemis trading
beyond 1!he boundaries of the State are also notable, The common
Prussian Communal Syscem of division according lo wages paid in
the respective areas is not appiicaole ; the two deciding ratios are
gross revenue and assessed values of property owned, not in a
mean (or other proportion) between /the rcsuUs, following the
G*emxan practice where various criteria are chosen, Dot in the
following peculiar manner ■

“Take the glross business in dollars of the corporation in the
State and add the same to the full value in aollars of the property
of the corporation loco led the State. The sum so obtained
shall be the numerator o, a fraction of which the denominator
shall consist of the total gross business in dollars of the corpora-
tion, both within and without the State, added to the full value
iij dollars of tii^ entire property of the cor|X)ra^ion, both within
and without the State. The fraction so obtained shall represent
the propc«rtiou of the capital stock represented within the State.*’

Taking the ease of a concern winch doe^ business both within
and 'without the State with a net profit of $3t,20() ; the gross
business done within the Stale is $50,000 ; the property located
within the State is worth -$‘20 ,000 ; the busincbs done within and
without the Stale is $150,000, and the tolal property within and
without the State is $21,000. We have the formula

60,000 -r 20,000 _ 70,000
160,000 + 21,000 171,000

of 34,200 = $14,000 taxable.

The more one tests the method in relation to different propor-
tions and classes of business the more of an aritlimetical curiosity
does it appear.

The individual is allowed to deduct from his gross income
dividends from a taxed company, but if from a partially taxed
company, such as the above, only a hke proportion of the dividend
is regarded as taxe(i> the remainder being treated as untaxed
income from outsiide the State. Tlic^re seems to be no provision
whereby the individual is to be kepi advised what this changing
proportion is — evidently he must find out for himself.

Although t^ administration is central and unified, the revenue
will go to the areas, 20 per cent, to the county, 70 per cent,
to the village, city, or town where it is collected, and only 10 per
'cent, to the State towards administrative expenses. The pro-
visions for allocation of the tax from one payer are very elaborate,
even mom to than the following example published by the Com-
missioners would indicate

No. 89.— VOL. XXIII.

146

THfi B00»0M10 ^OtTEHAI-

[MABCH

,, “A, person residing in the city of A, realises a net income

(after making the deductions which the law permits) of $2,840,
and also owns a hotel in the village of B, from which he receives
a net income of $540, and a farm in the town of C, which yields
a net income of $720, and his combined income is $3,60p. He
is a married man with noiihildren. Deducting the exemption of
$1,200, his taxable income is $2,400, and his income tax—

1 % of flrat $1,000 $10-00

li% of second $1,000 12-60

15 % of $100 6-00

Total $28-60

As the income was derived $2,340, or 65 per cent., from the city
of A, $540, or 15 per cent., from the village of B, and $720, or
20 per cent, from the town of C, the tax should be redistributed —
subject to the suljseqnent adjustments already indicated — in the
same proportions, that is : 65 per cent, of $28.50 or $18.53 to the
city of A, 15 per cent., or $4.27 to the village of B, and 20 per
cent., or $5.70, to the town of C.

As a final feature of interest may be mentioned the effort made
to secure returns complete in every particular, since the assessor
is subject to a jK-nalty of five dollars to be deducted from his salary
“ for each question unanswered *’ ! The Lntisher will think of
his own forms, and his lodhl assesior.

J. C. SlAMP

Note. — Since the above was written some imponant details are to hand. The
first year’s yield is £700,000, or con«ido>*ably more than the yield of the whole
federal tax in 1863. In Milwaukee alone the entire proceeds of income taxation in
any former year in ell the States put together are exceeded. Two-thirds is assessed
upon corporations, 5,536 in all, of which 3,977, or 72 per cent., are assessed at the
highest rate (6 per cent-), not more than 200 being assessed at any one of the^lower
rates. Greater prominence is to be given in future to “ stock*’ or ‘Mnventory ” in
computing liability.

Official Papebs

Departmental Committee on matters affecting Currency of the
British West African Colonies and Protectorates. Report.
[Cd. 6426.] 1912. Price 8J-d. Minutes of Evidence.

[Cd. 6427. J 1912, ♦’ Price Is. 2d.

This Committee has recommended the establishment in the
five Crown Colonies of West Africa of a gold exchange standard,
with a specific silver coin, closely resembling the standard estab-

X918] omoiAIii 147

' i

lished in India. Indeed, the details of the Committee's proposals
have so little novelty in them a>s to call for small notice. The
Colonial Office have accepted the Committee's recommendations,
but have referred them to ihe authorities of the Colonies in
question before actually carrying them out. The interest of the
Committee's report for students of mm^etary affairs lies mainly in
the evidence which they have collected ot the currency arrange-
ments existing hitherto.

At present the main media of exchange are silver coins of the
United Kingdom. In 1911 the British Mi'iit sent to West Africa
no le^ than £874,850 in . t.'rling silvei, and the amount ot our
silver issued since 1901 use m West Africa fa^s but little short
of what has been issued <or the United Kingdom itself; and in
recent year^ the pxofits of tin Mint have been greatly swollen
by receipts fi’ou this source This silvei, although limited legal
tender here, is in the peciiliar position of bepig unUmited legal
tender in West Africa. In the event of there being a flow of
money out of West Africa at any lime, liO provision exists for its
redemption in gold at par. Tne principal English joint stock
banks have an arrang(mient with the Bank of England by which
they may pay in a certain amount of silver coin in a given period,
but if the Bank is asked to take silver in excess of this amount,
the payment of a commission is required.

If the recommendations of the Colnmittee are adopted, and a
new specific silvei coin in introduced, it will be necessary in the
course of time to withdraw British silver from circulation. The
Treasury have agreed to take back an amount not exceeding
£100,000 in any year.

The Committee suggest that in the case of a new note issue,
the introduction of whicli they propose, the coin reserve should
amount to not less than three-fourths of tlie value of the notes in
circulation. Most economists would probably agree that a system
of legal reserve amcttHiting to a fixed proportion of the circulation
is nearly always vicious, because, as soon as the reserve has sunk
to the prescribed ratio, the redemption of any further note in-
volves a breach of the law. When the fixed proportion is so high
as three-fourths this objection has special force, because the
reserve actually held is not likely to exceed the legal reserve by
any very great amount.

The Minutes of Evidence contain a good deal of interesting
information relating to currency practice in semi-barbarous
countries under civilised administration.

J. Ebxkbs

L 2

X48 . BCoiiOlWO v[1IA!EM3«

fio^l Commission on the Natural Resouro^ *trad^, and hagida-
, tim of Certain Portions of Bis Majesty's Dominions, -

Minutes of Evidence. Part I. : Migration. [Cd. 6516.] 1912,
Price 2s. 9d.

Part II. : Natural Resources, Trade, and Legislation. [Cd. 6517.]
1912. Price 3s. 6d.

These first instalments of the Report of the Dominions
Commission contain no more than minutes of preliminary evidence
taken in the United Kingdom, together with some papers laid.
The first volume treats principally of the facilities for emigration
to the princi]ial colonies, and comjirises evidence from the Agents-
General and from representatives of a number of emigration
societies. The second volume deals with a great variety of topics,
of which the proposal for a British Empire Trade Mark is dealt
with at the greatest length. The Commissioners proceeded in
January, 1913, to New Zealand and Australia.

Consular Report on the German Law of 1909 against Unfair
Competition. [Cd 6006-2 ] 1913. Price 2d.

This summary is by Sif Prancis Oiip^nhemiei;. The general
principle of the German law is as follows : “Whosoever commits
in commercial intercourse for the purposes of competition acts
which are contiary to ‘ jiood fnilh ’ can be brought before the
courts, for the purfioses of an injunruon and the payment of
damages.” It has been held that “ads” are deemed to be con-
trary to “good faith ” if they are contrary to the sense of decpncy
of the fair and just-minded among the class concerned. Besides
this general princijile, the law refeis to certain specific, abuses of
unfair competition, of which the chief are*'abusi s in advertise-
ment, abuses in connection with “sales” (i.e., clearance sales,
&c.), unfair competition arising out of deceptive quantities sold in
retail parcels, the bribing of employ ds, and unfair comment by a
competitor against a man’s business reputation.

Statement of the Rates of Import Duties levied by Foreign
Countries upon the Produce and Manufactures of the United
Kingdom, so far as notified to the Board of Trade in October,
1912. [Cd. 6476.] 1912. Price 4«. lOd.

19X9.3 cmvOlM^ PATIBS 149

Return ^l^^hting to the • Rates of Import Duties levied upon
Aftieles ImpoHed into the BriUsh Self-Governing Dominions,
Crown Qokhies, Possessions and Protectorates, so far as
notified to the Board of Trvd‘t in October, 1912. [Cd. 6476.]
1912. Price 35. 8d.

These two volumes, comprising ’between them abodt two
thousand pages form a mos^ valuable and complete work of
reference on the subject dealt with. They are classified accordmg
to commodities, so that it is possible to compare at a glance the
relathe heighj)|of the tariffs oo similar prouuc+s in a great variety
of countries. The rat'^a oi duty are driven m tJie Englich equiva-
lents as well as in the toreign nieasuies and currencies. It is
intended to keep these relnms up to date by le-issumg them from
time to time 'a the future

Report of tic Commissioners of Customs and "Excise for 1911-12.
[Cd. 646;^ ‘| Price 9Jd. 1912.

This issue contains some useful statistical information relating
to Old Age Pensions, and gives an account of the principal
alterations effected by the new Old Age Pensions Act of 1911.

Statement showing how Deposits in*Govcrnment Savings Banks
in Certain Foreign Countries and British Possessions are
Employed. [Cd. 6300.] Price Id. 1912

Return Showing for every year from 1800 to 1910, inclusive, the
Current Price of 'British Wheal per quarter, the Highest and
* lowest Import Duties Charged on Imported Wheat, and the
Current Price of Bread in London. [H. of C. 339 of 1912.]

Price Jd. 1912.

Statistical Abstract for the British Self-Governing Dominions,
Crown Colonies, Possessions, and Protectorates, in each year
from 1897 to 1911. (49th number.) [Cd. 6533.] 1912.

Price Is. lOd.

Final Report on the First Census of Production of the United
Kiagdim (1907). [Cd. 6320.] 1912. Price 7s. 6d.

This Beport is dealt with in Professor Bowley’s article above.

150 . IHB fiOOKOMlO JOTTBNAI^ [mABCB

Report on Strilres and Loeh-Oute and on Conciliation and Arbitra-
tion Boards in the Vnited Kingdom in 1911, with Compara-
tive Statistics for 1902-1910. [Cd. 6472.] 1912. Price lOrf.

Report on Profit-Sharing' and Labour Co-partnership in the
United Kingdom. [Cd. 0496.] 1912. Price 8Jd.

To be reviewed.

Report and Evidence of the Committee of Inquiry into Conditions
of Employment in the Linen and other Making-up Trades
of the North of Ireland. [Cd. 6509.] 1912. Price 1«. 9d.

To be reviewed.

C/imRENT Topics.

Thk nt tent ion ol readers ol T^rofessor Irving Fisher’s article
on A More Slablc Gold Standard, in the last issue of the Journal,
is called to an article contributed by Mr. Aneunn Williams to
the Economic eJouRNAL of dune, 189*2, under the title of A ^ Fired

value of Bullion** Standard, Theie is airly jlose resemblance
between the proposals made by Mi. Wil)ia/i»s twenty years ago
and those for which Professor Fislur is ikw conducting so
vigorous a campaign : —though Mr. WiPiamB piotx'^sed to sell
notes, not gold coins, at a vaiymg pr m lenns of gold bullion.
It is interesting also to recall thf seven, criticisms which were
made, from the old-fashioned ])oint of view, in the following
number of the .Journal by Bir Robert Giffen on what he termed
proix>sals for “fancy currencies’*

Thr jirincjpal British Index Numbers have now been pub-
lished foi’ 1912. Ml. Bauerbeek's Index Number has risen from
80 in 1911 to 85 in 1912, or G*25 per cent. ; the Economises ^
from 115*75 to 121*26, or 4*67 i>ei cent., and the Board of Trade’s
from 109*3 to 115*0, or 6*2 per cent. The Board of Trade’s
Index Number for retail prices of food has risen from 109*3 to
114*9, or 6*1 per cent. Since 1900 the movements of these index
numbers, all the numbers for 1900 being reduced to 100 for pur-
poses of comparison, have been as follows ; —

1918] OURBBNI 161

H V ■

* u

lOb

Bd. of Trade

1900 ...

yiTboleeale.

lOQ

Retail Food.
100

1901 ...

93''’

969

101-9

1902 ...

96-9

101-6

1908 ...

93 ’

970

103*2

1904 ...

98-3

104*8

1905 ...

97-6

103*7

1906 ...

103

104

100-6

108*2

1907 ...

107

105

li/6-8

105*8

1908 ...

100

102-8

108*4

1909 ...

101

104-0

108*2

1910 ...

104

105

108-7

109*9

1911 ...

107

109-S

109*3

1912 ...

113

112

115-0

114*9

It has been announced th.H Mr. Sauerbeck will no longer con-
tinue the compilation his index number, but that it w^ill appear
in future in the Statist,

The fluctuations in the percentages of unemployed in the
period 1903-1912, according to the Board .of Trade’s returns
relating to about 850,000 members of Trade Unions, have been as
follows : —

1903

4-7

1908 ...

7-8

1904

6-0

1909 ...

7-7

1905

1910 ...

1906

3-6

1911 .

3-0

1907

3-7

1912 ...

But for the inflated figure for Mareh, due to the coal disf^ute,
the percentage for 1912 would have been a good deal lower than

for 1911.

Dr. James Bonar, Deputy Master of the Ottawa Mint, recently
delivered an interesting address in ('’anada on the roundabout
way in which the huge loans, now being made by this country to
Canada, are remitted. In fifteen years Canada’s loans, for all
purposes, chiefly from England, have amounted to about
£400,000,000. In 1911 they were about £44,000,000, and 1912
£36,000,000. As a natural conse(juence of this huge import of
capital, Canada has an adverse trade balance, amounting in 1911
to £35,000,000. But, Dr. Bonar pointed out, the balance of trade
between Great Britain and Canada is in Canada’s favour — ^by
£6,500,000. The loans cannot be made, therefore, by the method
of direct trading. We find, on the other hand, that between
Canada and the United States there is a trade balance adverse to

^ For the Economist index number the mean is taken between 'the index! at the
beginning and end of the year, i.e., tbe index for 1912 is the mean between the
index for ;razL 1, 1912, and that for Jan. 1, 1913.

152 THB ECONOMIC jrOUBNAL [MAECH

Canada to the amount of ^35, 000 ,000, Thus, in a sense, the
English loan may be said to have financed the American trade.

A CORRESPONDENT writes : An Inrestigation of the conditions
of Life of the Finnish Workman, by one of the women factory
inspectors of Finland, has been lately published. Out of 953
expenditure books issued, to be filled in during fifty-two weeks,
380 w^ere found to be perfect. Among other interesting results,
the following average ])er(*entageB wwe found to be spent on
different forms of food : btead, 14T ; milk and cream, 9‘9 ; butter,
7‘8; cheese, 0 5; eggs, 0'8 ; meat (excduding sausages), 6’2;
sausages, J*t; fish, 1'8 ; potatoes, 2*4; vegetables, 0*7; fruit, 1;
sugar, 4*3; coffee, 2 7 ; tea, 0*2; salt, vinegar, and spices, 0*3;
mineral water and beer, 0*7; sundries, 0*6; making a total of
55 4 per cent. The ])roportionate expenditure on different articles
as compared with that m other countries w^orked out as follows : —

Finland.

Germany.

u s.

Denmark.

Sweden

Food

TVr cent. 55 40

45 55

43 13

48 30

43*74

Glotliing .

,, 11 80

12 04

12 95

10*14

10*91

Beni

12 40

17 90

IB 12

13*29

19*04

Fuel and lighting .

,, 4 10

4 07

5 69

4 43

123

Buudrieu

„ 16 30

19 78

2011

17 78

22 05

Total

100

The effect of a shortening of the woiling daj on the
employer’s cost of production has recentH been the subject of
investigation in France' As is well known, the first attempt to
fix a working-day in France by the State was the decree ol*
September 9th, 1818, which provided for a 12-hours day; and a
12 hours day remained the normal maximum until 1900, when 11
hours w\as fixed by statute. The law^ of 1900 provided, however,
that tw^o yeais after its promulgation (i.c., March 30th, 1902) the
legal w’orking-day should be reduced to 10^ htiurs ; and tw’o years
after that (/.c., on March 30th, 1901) to 10 hours. But there was
never any vc'ry strict enforcement of the law. Wherever the
conditions were such as to warrant a longer w'orking day, means
were provided which allcnved of the prolongation. Even where
the law has been tolerably well maintained, employers are not,
however, complaining of the increased ('ost of production necessi-
tated by the increased cost of labour. One result of the shortened
working-day has been an increase in the system of piece-w^ork,
which is replacing to some extent the former conditions of time-
work.

1913] cJtfRRsssr ?roMOs 168

Sjb Thomas Hhnrt Elliott, , one of the honorary

secretaries of the Eoyal Economic Society since its original
foundation, has been appointed Deputy-Master and Comptroller
of the Boyal Mint. Sir Thomas Elliott, who is fifty-eight years
of age, had been secretary of the Board of Agriculture since 1892.
The very important extensions of the work of this office in recent
years have all been carried out under his general direction, and
the development of the Board of Agriculture into an important
Department of State has chiefly taken place during his long reign
there. The best wishes of members of the Eoyal Economic
Society will follow Sir Thomas Elliott to his new position of
greater ease and dignity ; and apart from their personal feeling in
regard to one who has so long served them, they nill greatly
welcome the fact that regard has been had to economic and
administrative experience in apf)ointiug to an important office
in relation to our currency, which has been used too often in
the past as a reward for claims primarily political.

Mu. A. 1j. Bowled has received the degree of Sc.D., and
Mr. G. U. Yule the degree of M.A. honcms causti, in the
University of (Cambridge.

It has been decided to establisli a Faculty of Commerce in
the University of Durham, with degrees of Bachelor and Master
of Commerce.

RECENT PERIODICALS AND NEW BOOKS.

The Economic Review.

January, 1913, The Fjconomic JSasis of Universal Reace~Gosmo~
poliian or Iniernational? Archdeacon Cunningham. Bead
before tlio l^kjoiioiiiie Section of the British Association, 1912.
Juvenile Jjahour in Germany. Ernest Lesser, Copartnership
arid Labour Unrest. H. Sanderson Eurniss.

• Sta iisiieal J ourna I .

December, 1912. Htill Birlhs in Relaii<m io Infantile Mortality,
Eeoinald Dudfield. a discussion of the report on this subject
prepjir(‘d by a S])(*cial Coinrnittee of the Society. The report
is reprinted in this mnnber. PrcHidcniial Address to the
Economic Science and Statisiind Section of the British Associi-
iion, 1912. Sir II. H. Cunynouame. An attempt to justify
economics as a “positive’' science. The Nation 8 Food Supply,
n. H. Bew. An estimate of the proi)ortion i)roduced at home.
Scottish AgricvlluraJ Chmiges. Major P. G. Craigik.

January, 1913. On ihc use of (he Theory of Prohahilities in Slatisiios
relating to Sociciy. Y. Edgeworth. The Presidential
Address. The Rale of Interest oy) British and Foreign Invest-
vienls. U. A. JiEiiFEriDT. An important contribution, to be
followed by others, based on the study of a considerable mass
of evidence. The Coyisumption of Alcoholic Liquors in the
United Kingdom. A. D. Webb.

Danhers* Magazine.

December, 1912. Banhers' Congress at Berlin. W. C.. Drehek.
An account of the proceedings at the important congress held
at Munich in September. Presidential Address to Institute of
Bankers. Lord Gosciien. British Gold Rctsertyes and the Gold
Question in India. Sir Edw^ard Holden. An address delivered
to the Manchester Statistical Society.

January, 3913. Indian Currency and Finance. R. Murray. Denies
the existence of the alleged clamour for a gold currency. The
Price of Consols. A, H. Gibson. Mr. Gibson brings up to
date his em])irical studies of this subject. Stock Exchange
Values for the past Month and Year.

February, 1913. Credit and Trade. Statistics, compiled by Mr.
Seyd and Kemp’s Mercantile Gazette, of Commercial Failures
in 1912. London Bankers* Clearmgs in 1912. Full statistics
from 1868 to 1912.

156

MAECH,1913] eecknt pbeiobioals and new books

Journal of the Institute of Bankers.

Januaky, 1913. The Foreign Exchanges. , Lectures 1. and IL
Hartley Withers. To be published shortly in book form.
The Indian Financial Management, W. F. Spaldino. A
defence of the policy of the India Ofi&ce against Mr. Webb’s
criticisms.

The Sociological Review.

January, 1913. Fatigue and Efficiency. B. L. Hutchins. A review
of the facts in the light of some recent works.

The Women's Industrial News.

January, 1913. Truck Fines and Deductions. B. L. Hutchins.
An historical study.

The Clare Market Heniew.

February, 1913. Seine Branches of the British Library of Political
Science. V. The W. M. Acworih Collection of Transport
Literature. E. Cleveland Stevens.

The Socialist Reriew.

February, 1913. The Nationalisation of Coal Mines. F. Brooks-
BANK. “A valuaiioD of the coal pits having been made (on
a 9 per cent, basis), the coal owners must be compelled to
exchange their share-script for Government bonds bearing
interest at 3 per cent.*’ This would leave a profit balance to
the State of £10,500,000 annually for sinking fund, etc.

Quarterly Journal of Economics (Boston).

November, 1912. Agricultural Development in the United States,
1900-1910. J. L. Coulter. Ethical and Economic Elements
in Public Service Valuation. J. E. Allison. A discussion of
the principles on which the relations can be regulated between
the owners of a public utility and the consumers of its product.
Social Denmark. P. Soiiou. On Co-operation, Trade Unions,
Insurance, etc., prepared in the Danish Ijcgation at Washington.

* Specialisation in the Woollen and Worsted Industry. L. D. H.
Weld. A general discURsion, not merely with reference to
U.S.A. Fisher's Theory of Crises : A Criticistn. M. T. England.
Criticises Professor Fisher’s theory that crises ai‘e duo to the
interest rate (measured in money) not rising fast enough in
comparison with the rise of prices. The Origin of the National
Customs-Revenue of England. N. S. B. Gras. Based on
original authorities. Frankfort-on-the-Main : A Study in Prus-
sian Commercial Finance. I. Anna Younoman. An account
of the very interesting experiments made there.

Political Science Quarterly (New York).

December, 1912. Recent Tax R.eforms Abroad. IL E. R. A.
Seligman. Deals with Germany and Australasia. Marxism
versus Socialism. VII. V. G. Sinkhovttch. A continuation
of articles which have been appearing since 1908. Russian-
American Commercial Relations. J. V. Hogan.

156

THE MCONOmc ^OUBNAL

[MABCH

Annals of American Academy (Philadelphia).
jNovEMBKR, 1012. The Oiitlooh jot Industrial Pvaccl A series of
articles by oooiioiiiists and business men.

The Journal of Political Economy (Chicago),

November, 1912. The Banldny Question in Congress. H. Pahkeb
Willis. Wltaf is Future of American Cotton? 3, V.

Bogan. The Economic Basis of the Fight for the Closed Shop.
B. 'J\ l^Kwis. A dibcussion of the grounds of the claim for
the exclusion of non-union labour.

Decemukr, 1012. The Economic Tlicoiy of a Legal Minimum Wage.
vSrnNEV Wrain. “The ceonoiuist has to point out to the states-
man tluit tJie adof)tion of a legal Mininiurn Wage would in no
way jnciease the amount of maintenance w’hich has to be
])i*<j\id(Ml l)\ tlH‘ eommuiiity, in one form or another, for persons
inea])al)](‘ ol produeing tlieir ow'n keej). It w’ould, on the con-
trary, trnd st(‘adiK to reduee it- . . Minimum Wage Laws.
F]iORi]N('L Keller. In the United States.
dANUAin, JOlIh The Aim and Content of the Undergraduate

Economics (^urdculuni . A. B. Wolfe. Bow ai'e the aims of
eulturo and formal discipline and of vocational training to be
reconciled V Some Economic Aspects of Immigration before

1H70. 17 . W. 1\-\GE. Continued from the December number.

JCatlg (\nial Traffic and Bailroad Compeiition in Ohio. E. L.
JhXMHT.

Bullcliu (Ic la Hlatistiquo Geucralc dc la France (Paris).
OcTofiEK, 1912. [/(’migration dcs peuplcs jauncs. Pp. 34. H.
Bunlr. *

IUtuc (V Ecomnnii^ Politique (Paris).
NovEMBEu-DECEMBFJt, 1912. Lc Bossin dc Briiy vf la politique dc
scs ent uprises sidirurgiqaes oa ininicrts. M. Vignes. Con-
tinued in the next nuinher. Lc Bresil ci Vindustrie dn Caout-
chouc. If. Picard. Lc Credit ouv/icr par Vassurance. P.
Naiuiolz. \ tlief)ndical study, lidation entre les variations
annucIUs du chomage, dcs gievcs ct des prix. C. Hist. W^ith
rt'ieveru'e to a recent contribution by M. Ijucien March to 'the
BuUciin dr la slaiisiiquc g hr c rale dc lo France. Prof. Hist
concludes tliat “ le ehdmage volontaire cst d’autant plus fort que
le ehojnago iiivolojitairo ost plus faible, et ruciproquement.”
Between prices on the one hand and strikes and unemployment
on the otiier lie (‘an discover no marked statistical connection.
IVI. March re];lu‘s briefly in the lu^xt number.

January -P' jnuiF \RY, 1013. La vcncric ouvrii'cc d'Albi. B.
Lavergne. Jjc r memo (die ment dt la cemvention de Bruxelles
ct les condiiions actuelles de la production sucrierc. J. Hitibr.
L'insfitui international d\igriculture. E, BouRGiN.

Journal dcs Economistes (Paris).

December, 1912. Jja Ecglcnicntation dn travail des employis.
Yvk.s Or^oT. Frederic List ct la polhnique autour de ses iddes
cn 1912. Arthur Kaffalovici^. Le Rapport de M. Dalimier

IMS] ' bkcisn* A 157

et la di$cu8aip%%ia, dhi^mbf6 siir l& 'buigei des Ponies et deu
^ Tel€gmphe8,\ CK. Maci^Iire. «

Janijaev, 19l8. he MarcM financier en 1912. Arthur Eapfal6vich.
Ij*Eco 16 autrichienne d'economie politique: Feilbogen. Eighth
article.

L'Economiste Frangais (Paris).

January 11, 18 and 25, 1918. Lcs Pliice merits financiers, Paul
Lbroy-Beaulieu. a study, in three articles, of the change in
, prices of the leading French securities during 1012.

Revue Economique Internationale (Brussels).

November, 1912. L'Alhanie economique et politique a la veille de
la guerre, A. Baldacci. Evolution des Chemins de Fer
amcricains, F. W. Powell. Le Commerce rxtrrieur des
E tats -Unis, P. E. Smets. Chiefly a discussion of the balance
of trade. Les Emprunts chin o is. E. Cammaeuts.

December, 1912. La Bourse d'Alcxandrie et Ic marchc des cotons
Sgyptiens, L, Polier. La Culiure du coion dans i/Asie
Centfalc Russe. M. Laminok. Lc Coion oriental et niMi-
terraneen. Y. M. Goblet.

January, 1918. Articles on the Panama Canal of considerable
interest by three distinguislicd American writers. Jlistoire du
Canal de Panama. William H. Burr. Lc Canal dc Panama
au point de vue economique. Emory 11. Johnson. Lc Canal
de Panama au point de vue miliiaire. Admiral Mahan.

Archiv fur Sozialwissenschaft und Sozialpolitik (Tiibingen).

November, 1912. Alie und none Einu'dnde gegen den historischen
Materialismus. Achille Loria. Versch mehxing and gegen-
seitige Penetration der Eassen und Nationolitciicn : Staiistiche
Vntersuchungen. F. Savorgnan. An attempt to determine a
coejffioient of “homogamy'* between races, colours, nationalities,
etc. The illustrative statistics are mainly drawn from the
Argentine, Budapest, and Boston. Die Arbeifsteilung im

^istigen Lehen : Fine Unicrsuchung Hirer haupfsiichUchen
FormeUf Geseize und Trichhrdfte. W. Hellpach. This study
of the principle of division of labour is to be continued. Soziale
Probleme des Dienstvertrages. Dor Dienstvertrag im Burger-
lichen Qesetzbuch fiir das Deutsche Erich und im neuen
schweizerisclien OhUgaiionenrccht. Pp. 74. E. Adler. Die
gegenwdrtige Lage der Arhciter in Japan und das ncue
Fabrikgesetz. K. Kuwata.

Jahrbuchef fur Nationokonomie und Statistik (Jena).

January, 1918. Zur Tlieorie der Statistik. Hellmuth Wolff. A
review of various schools of thought on the philosophy of
statistical theory.

Annalen fur Soziale Politik und Oesetzgebung (Berlin).

Parts III. and IV., 1912. Der Ansbau dor Erhschaftssteuer ah
Besitzsteuer fur das Rei/fii. ■ H. Weissenborn. Qeburten-

X58 THE ECONOMIC JOUBKAL [MARCH

rii^hgan^ und 8ozialpoliiik. 0. Lakdsberg, Bergarbeiterschute
' im Preussen und Oesterreich. P. BussOn. Das Lohndmter-
gesetz. Constance Smith. Deals with the British Act of 1909
relating to Trade Boards and Sweated Industries. Zur jungsten
Bntwichhing der Arbeiigeher-Verhdnde, Gerhard Kessler.

Zeitschrift filr V olkswiv^schafi , Sozialpolitik und Verwaltung

(Vienna).

Part VI., 1912. TJ^iirrsuchungen iihcr Auslcse und Anpassung der
Arbeitcr, Richard Sorer. ' '

ScAentia (Bologna).

January, 1913. The Sun-Spots. E. W. Maunder. A summary of
the latest views of the astronomers on the periodicity of sun-
spots.

Giornale degli Eeonomisti (Rome).

September, 1912. ll primo annuarlo inicrnazionale di Statistica
Agraria. U. Ki\jci. An introductory description of the annual
which the International Institute of Agriculture has begun to
publish. Jjd disirihuzionc della ricJirzza. L. Amoroso. A paper
read to tlie e(^<jnoinico-statistical section of the Congress of
Mathematicians last year.

October. JjC (\)uL}n(niicarjioui ferroviarie in Cina. U. Benedetti.
Tlie devolopniont of railways in China augurs well for her
economic*. ])rogress. Monograjia di famiglia. G. Baglio. A
Sicilian family budget.

November-Decemher. L'azio^ie rccenle delV oro sui prczzi generali
dclle iticrei. R. Benini. A severe criticism of Yves Gnyot
leads to a rt^statenu'nt of monetary principles purporting to form
a bridge l>etweeii the defenders and assailants of the quantity
theory. I nterfcrrnzr r getfiio dellc imposie svgli increnienti
di valore, B. Griziotti.

January. Prohlcmi del Tesoro r della circalazione. G. DEL Vecchio.
Gli odierni a-sprff/ dclV Kconoinia, agraria. C. dt Nola. Inter-
esting statistics (d the world’s railways by G. Mortara, anjl a
study on the j)urc* science of tinane-e by B. Griziotti are buried
in the snuill print which now, unfortunately, conceals the
greater part of the Giornale.

La Biforma Social e (Turin).

November, 1012. (Questions of definition and taxation are discussed
exhaustively, in (ionnexion with Prof. Pisher s book on Capital
and Income and Prof. Beligman’s Income-tax by Giuseppe
Prato.

December. The polemic against protected iron manufacturers is
continued by L. Einaudi.

January, 1913. The concejit of taxable income, vdth reference to
Prof. Einaudi’s recent work, is the subject of an article by
Achille TjOria. There is also an instructive description of the
failure of a Socialist business (“cantina comunale*’) in an
Italian locality. ^

1918 ] RBCBNT PBIIIOBICALS NEW BOOKS 169

NEW BOOKS

JSnglish.

Ashley (Annie). ' The Social Policy of Bismarck : A Critical
Study, with a Comparison of German ard English Insurance Legis-
lation. With a Preface by Gustav von Schmoller. London:
Longmans, Green. 1912. Pp. ix-f95. 2s. net.

[Birmingham Studies in Social Economics. III. To be reviewed,]

Ashley (W. J.). Gold and Prices. London : Longmans, Green.
1912. Pp. 32. Is. net.

[Reprinted from the Pall Mall Gazette. Noticed in the Economic Joubnal.
June, 1912, p. 358.]

Baikd (W.). The One Pound Note: Its History, Place, and
Power in Scotland and its adaptability for England. (Third edition
revised ^nd brought down to date.) Edinburgh: Baxendine. 1912.
Pp. 72. 2s. net.

Boag (George L.). Manual of liailw^ay Statistics. London:
Bailway Gazette. 1912. Pp. 185. 4s. net.

[By the Assistant Manager of the Groat Southern of Spain Railway, who has also
had railway experience in England, the Argentine, and Southern Nigeria. A
discussion of principles followed by appendices of practical rnatorial.]

Carlyle (A. J.). Wages. (Christian Social Union Handbooks.)
London: Mowbray. 1912. Pp. 125, 2«. not.

Chatterton (Alfred). Industrial Evolution in India. Madras:
The “Hindu Office. 1912. Pp. 369.

[This volume, by the Special Adviser for Industries and Commerce in Mysore, is
a reprint of a number of articles on Indian industrial and economic questions. To
be reviewed.]

Dobson (G.), translated by. Company Eire Insurance in Bussia,
1827-1910. St. Petersburg. 1912. Pp. 145. Large 4to., with
diagrams.

[Published by the Tariff Committee of Russian Insurance Companies.]

Henry (Egbert). Who Pays? The Beal Incidence of Taxation.
London: George Allen. 1912. Pp. vii+70. 2s. 6d.

[With some eccentric diagrams.]

Leake (P. D.). The Use and Misuse of the Sinking Fund.
London : Gee & Co. 1912. Pp. 19.

[A paper read before the Chartered Accountant Students’ Society of London,
dealing in part with the proper use of the sinking fund by municipal bodies.]

Pratt (E. A.). Agricultural Organisation : Its Bisc, Principles,
and Practice abroad and at home. London : P. S. King. 1912.
Pp. 272. 3s, 6d. net.

PROTHERO (B. E.). English Farming Past and Present. London :
Longmans, Green. 1912. Pp. xiii4-504. 12s. 6d. net.

[To be reviewed,]

Seaton (B. C.). Power v. Plenty : Some Tlioughts on the Tariff
Question. London : P. S. King. 1912. Pp. 164. 2s. 6d. net.

[Tariff Reform ‘‘represents the poJicy of Productive power -a policy whose aim
it is to develop all the resources of a State with a view to national ‘ independence ’
as opposed to national * Interdependence.’ ” The treatment of the subject is
common-place.]

160

THS BCONOMIC JOTJBl^AIi

[kaboh

Shadwell (AaTHuii), Edited bv, Nelson^s Emcyolopiedia of
JijtdustrialiBin. London : Thomas Nelson. 1918, Pp. 548* Is. net.

pDhe editor of this oncyclopscdia has followed the wise course of including a
comparatively small number of separate articles* but each of substantial length and
by a distinguished contributor. For example, there are articles on Capital and
Cost of Living by Prof. Ashley, Wages hy ilr. Bowley, Mtynphty&rs* Unions by Sir
Hugh Bell, Methods of Industrial 2*cace by Prof. Chapfhan, Factory Law b}^ Mr,
J, H. Greenwood, Hows of Lal^Mr by Mr. Ramsay Macdonald, Strikes by Prof,
Nicholson, Lahoui and rolitics by Mr. Philip Snowden. To be reviewed.]

Thomson (Mary Horner). Environment and Efficiency; A
Study in the liecordR of Indubtrial ScHooIh and Orphanages. With
a Preface by J. Tieiidel Hams. London: Longmans, Green. 1912.
Pp. viii + lOO. 2.S. net.

[Birmingham Studies in Social Economics and Adjacent Fields. I. <‘»The
Studios in thi« Series,” which is under the editorship of Prof. W. J. Aahlev^ *'are the
outcome of the inqinnos of students working for the Social Study Higher Diploma or
for the Higher Degrees of the University ot Birmingham.” To be reviewed.]

Trades for London and How to Enter Them. Revised with
additions. Loiulon : Longmans, Green. 1912. Pp. 204. Is. net.

[Comj)iled by the Approuticeship and Skilled FiTnployment Association. A
valuable hamlbook of practical details in regard to a groat number of trades.]

Walsh (Roueht),. The Principles of Industrial Economy, illus-
trated by an jnqiiiry into the comjiarative benefitH conferred on the
Htaie and on the Uommunily by Free Trade and Fair Trade or
Moderate Protection. London: i\ S King. 1912. Pp. xiv-i-257.
()«. net.

[An advocacy of I^rotection. Tlio author contendH that, if all the wheat
required by the United Kingdom wore grown within the country, tins would load to
an additional creation of wealth amounting annually to J064,922,946.]

Watson (ALtRun William). Friendly Society Finance considered
in its actuarial aspect Loudon . C. k E. Layton. 1912.
Pp.v 4-132,

[Lectures delivered at the Institute of Actuaries, 1911 -12.]

Winder (Phyllis D.). The Public Fecduig of Elementary
Schoolchildren: A Rovitnv ol the General Situation, and an Inquiry
into Birmingham e\perienc*t‘. With a Preface by Norman Chamber-
lain. London- Longmans, Grt'cn. 1913. Pp. ixH-84. 2,s'. net,

[Birmingham Studies m Social Uoonomiob. TI. To be reviewed.]

American, ,

CoMAN (Katharim) Ecoiioiuic Beginnings of ilv* Far West:
How we won the land beyond the Mississippi. Vol. I. Explorers
and Colonisers. Yol. II. American Settlers. N(‘W York: The
Macmillan Co. 1912. P]). \i\-f 1184-1x4-450. 17s. net.

[A readable rather than a learned work.]

Farnam (Henry W.). Bibliography of the Department of
Econonii(‘s and Soeitdogy of the Carnegie Institution of Washington.
1912. Pp. ]7.

[The V Pepartmont has b^en engaged since 1903 on organising work entitled
Oontril&tions to American Economic History.” 238 monogrHplis or parts of
monoj^phs have boon prepared, 108 of which are unpublished. This is a complete
list ol Jthe titles and author, s of those monographs.]

Moulton (Harold G.). Waterways Dcrsus Railways, Boston:
Houghton Mifflin. 1912. P{). xviii 4-468. $2 net.

[Reviewed above.]

1918] BECBNT PEBIOmCALS AND NEW BOOKS 161

Patten (Simon N.)» The Keconstr action of feconomio Theory,
Philadelphia : American Academy. 1912. Pp, 99,

[Supplement to The Annals of tlie American Academy of Political and Social
Scunccy November, 1912. The thesis of this very interet>ting essay is not easily
summarised. To be reviewed.]

Kailway Economics. Chicago : University Press. 1912. Pp.
446. 128. net.

[A collective catalogue of books in fourteen American libraries, prepared by the
Bureau of Railway Economics, Washington, D.C.J

Kipley (William Z.). Kailroads: Kates and Kegulations.
Jjondon: Longmans, Green. 1913. Pp. xviii-f659. 148. net.

[An important and comprehensive treatise, to be followed shortly by a companion
volume on Railways: Finance and Organization. To bo reviewed.]

Stevens (William S.), Edited by. Industrial Combinations and
Trusts. New York: The Macmillan Co. 1913. Pn. xiv + 593.
Ss. 6d. net.

[A oollaotion of first-hand materials, which ainn at putting within the reach of
students the original documents relating to “ Pooling, Trust, Factors’, and Inter-
national Agreements ; court decisions and laws against Trusts ; Trust methods of
fixing prices, eliminating competition, and restraining trade ^ the dissolution plan.s
of dissolved Trusts ; lease and license agroomciits of representative patent
monopolicfi ; and the views of eminent business and professional tnen.” To be
reviewed.]

Upson (Lent Dayton). Sources of Muiucipul Kevenue in Illinois.
Illinois : The University. 1912. Pp. 126. 75 cents.

[ University of Illinois Studies in the Social Sciences. J

Frenclt. ^

Bellom (Maurice). La Definition Legale del Tiivalidite en
maticre d ’Assurance Sociale : Kcclierche d’une formule. Paris:
Kousseau. 1912. Pp, 28.

[Based on a comparison of the practice of different countries.]

FisciiEL (Marcel-Maurice). Le Thaler dc Marie-Thcresc : Etude
do Sociologie et d’Histoire Econoxnique. Paris: Giard & BrRTe.
1912.. Pp. xxi-f 208. Fr. 5.

[To be reviewed.]

Guyot (Y'ves). La Gestion par FEtat et ks municipalit4s.
Paris: Felix Alcan. 1913. Pp. viu + 437. Fr. 3.50.

[Reviewed above.]

Mahaim (Ernest). Lg Droit international ouvrier. Paris: Sircy.
1013. Pp. 385. Fr. 6.

[Lectures delivered before the Faculty of Law in the University of Paris. To
be reviewed.]

Mataja (Victor). La Ke^clame dans scs rapports avec les
Affaires et le Public. Paris : Polmoss. 1912. Pp. 77. Fr. 2.

[Translated from the^rman. Reviewed above.]

Nooaro (Bertrand). Elements d ’Economic politique: Produc-
'tion — Circulation. Paris: Giard. 1913. Pp. vii + 388. Fr. 6.

[A text book, primarily intended for French law sbudenta in their first and
second years.]

No. 89.— VOL. XXIII.

162

THE ECONOMIC JOXJBNAL

[march

Raynaud (B.)- Vers le Salaire Minimum: Etiidc d’^conomie et
de legislation induBtrielles. Paris: Eeoueil Sirey. 1913. Pp. xi
-f-518. Fr. 12.50.

[BihliotTUgue d* Economic politique et de Sociologie VI. Au exhaustive treatise
on tbo subject. To bo reviewed.]

' German.

Bkek (M.). OciBohkilito des Sozuilisiiius in England. Stuttgart :
J. H. W. Dietz. 1913. Pp. xii + r)12.

[First part (pp. 222), 1760-1824; second part (pp. lOG) 1825-1864 ; third part
(pp. 83) 1856-1912. To be reviewed.]

Hernek (Heinrich). Ilafenahgaben und Schiffs-vermessung :
ein Kritischer Hcifcnig zur Wurdigimg ihrer technischen, wirtschaft-
lichen und statistisclien Bcdciitung. Jena: Gustav Fischer, 1912.
Pp. vi+128. M. 8.

[Prohhyne der Wcltwirtschaft XT. A tcclinieal, rather than economic, discussion
of the dimeiiBiouB of shii)H and thoir regulation.)

Herrmann (Eltse). Auslese und Anpassung der Arbeiterschaft in
der Wollhutindusine. Munich : Duncker k Humblot. 1912. Pp.
63. M. 1.80.

[Published in the Shriften des Vereins fitr SozialpoHtikf being a further instal-
ment of thoir V niersuchiingm Uber Amlcse und Anpassung {Bertifswahl und
Berufsschicksal) der Ai’hciie^ in dc verschiedenen Zimigcn der Grossindustrie.]

Kaiiler (Wilhelm). Die Bildung von ludiistriebezirken und
ihre Probleme. Leipzig : Teubner. 1912. Pp. 27. M. 0.80.

[From tbo Vortrdye der Gchc-Stiftxmg zu Dresden.']

Kuczynbki (11. ). ArbeiliRlohn und Arbeitszeit in Europa und
Amerika, 1870~]9()9. Berlin: Julius Springer. 1913. Pp. vi-f817.
M, 24.

[A huge collection of facts and figures relating to wages and hours of labour in a
great number of trades. To be reviewed |.

Jacobi (Dr. Dorothea). Die gemeinnutzige Bautatigkeit in
Deutschland, ihre kultiirellc Bedeiitung und die Grenzen ihrer
Wirksamkeit. Munich: Duncker k Humblot. 1913. Pp. x + 152.

M. 4.

[Sohmollor fl Staats-und sozialwisseyisckaftliche Forschungeny Vol. 167.]

JjEnz (Paul). Die Konzentration irri SeeschifPahrtBgeworbe.
Jena: G. Fischer. 1913. Pp. viii-}-142. M. 4.

[On capitalisation, monopoly, and competition, the tendency to concentration,
etc., in tbo shipping trade. To be reviewed].

Manes (Alfred). Versiclierungswesen. Leipzig: B. G. Teubner.
1913. Pp. xiv + 485. M. 11.

Second edition, revised and enlarged of Professor Manes’ treatise on the origin,
meaning, organisation, and technique of Insurance, both m general and in numerous
particular forms. The first edition was published in 1905 and was reviewed in the
Economic Journal, Vol. xv, p. 418. To bo reviewed.]

Passow (liiCTiARD). Mutcrialien ftir das wirtSchaftswissensebaft-
liohe Studiuin. 111. Warenborsen. Leipzig: Teubner. 1912.
Pp. v-fl52. M. 2,50.

[A collection of material relating to the rogulations of tbo German produce
exchanges.]

•1913] . EECENT PERlOmOALB AND NEW BOOKS 163

PoPPEBTLyNKBDS (JosKF). Die aUgerfleme N&hrpflicht als LSaung
der spzialen Frage, eingehend bearbeitet und statistisch durch-
gerechnet: mit einem Naohweis der theoretisdhen und praktisohen
Wertlofligkeit der Wirtschaftslehre. Dresden : Carl Reissner. 1912.
Pp. xvi + 813. M. 17.

[latended as the programme practical policy. To be reviewed.]

Pbeyer (W. D.). Die Arbeits- und Pachtgenoesenschaften
Italiens. Jena: G. Fischer. 1918. Pp. 228. M. 6.

[To be reviewed].

Ross (Lisa). Weibliche Dieiistboten und Dienstbotenhaltung in
England. Tubingen: J. C. B. Mohr. 1912. Pp. viii + 99. M. 3.

[Archiv fUr Sozialwissenscha/l tend Sozialpolitih. Supplement VIII. To be
reviewed.]

ScHMOLLEU (Gustav). Charakterbilder. Munich : Duncker &
Humblotiy 1918. Pp. vii-f302. M. 7.

[This is a collection of character sketches of dislinguished economists and
German statesmen which Professor Sohmollcr has written from time to time over a
considerable number of years. After East«*r of this year Professor Schmoller, at the
age of 75, is to retire from the active ducios of lecturing and he offers this volume,
primarly to his friends and pupils, as in the nature of ^ fard^ell gift. To be
reviewed.]

Sella (Emanuel). Der Wandel dew Besitzes : Versuch einer
Theorie des Reichtums als OrganisAius. Munich : Dunckor k
Humblot. 1912. Pp. iv + 98. M. 2.50.

[Translated from the Italian.]

SoMBART (Werner). Studion zur Entwicklungsgeschichte dea
modernen Kapiialismus : Vol. I. Luxus und Kapitalismus. Munich:
Duncker & Humblot. 1913. Pp. viii-f 220. M. 6. Yol. II. Krieg
und Kapitalisnuis. Munich : Duncker^ & Humblot. 1913. Pp.
viii4-232. M. 6.

[These are the first two iustalmonks of the new edition of Professor Sombart’s
Modeme Kapitalismus. To bo reviewed ]

Stammhammer (Josef). Bibliographie der Social-Politik : Band
II. enthaltend die Literatur von 1895-1911 und Erganzungen zu
Band. I. Jena: Gustav Fischer. 3912. Pp. vi + 8Bl, M. 30.

[This enormous compilation— tlie above volume must contain more than
20,000 titles — brings up to date this first volume, which was published in 1896. It
deals Chiefly with labour and with social questions connected with labour, and does
not attempt to cover the whole field of economics. The literature of all countries
is classified, and the method of classification and the cross-references seem admir-
ably adapted to make it as useful as possible to a student. Articles in magazines
and journals are fully catalogued. The volume should form a valuable work of
reference for libraries.]

ZiZBK (Franz). Soziologie uiuJ Statistik. Munich : Duncker k
Humblot, 1912. Pp. 47. M. 1.50.

Italian.

Caronna (F.). La Teoria della erenzione tributaria dei redditi
minimi. Palermo: Reber. 1913.

Fanno (Marco).' Le Banche e II Mercato Monetario. Rome:
Athenaeum. 1913. Pp. 395. L. 8.

Gini (Prof, Corrado). Contributi atatistici ai Problem! dell’
Eugenica. Rome. 1012. Pp. 112.

[Reprinted from the Rivista Italiana di Sociologia.]

164 THB ECONOMIC JOtlENAli [MABCH, 1918

Graziani (A.). Principii di Economia Commerciale. Naples :
Alvano. 1913.

SafcRK (Aktitro). IMutuiale di Storia del Commercio. Vol. I.
Dalle Origini alia Kivoluzione Francese. Turin : S. Lattes. 1913.
rp. 459.

Tknerklli (F/G.) Lc Finanze IfJomunali. Milan: Society
Editrico Lihraria. 1913. Pp. 450.

fA study of the iiir-ome aud expenditure of Italian Communes.]

Statist ique doTj)()graj)hique des grandes villcs du monde pendant
aniu'es 1880 1009. PaK. II. Amsterdam: J. Muller. 1912.
Pp. 115

[Published by the IVtreau municipal de StaHsqUfi d' Amsterdam. Part I dealt
with the population, birth rate, death rate, and infantile mortality in European
towns. I'his partcl-'iils witli twelve towns in Asia, three in Africa, nine, in America,
und three in Australia..]

CJatalogue de I'lnstitut Nobel Norv{'gi(‘n. T. Litt/u’nture Pacifiste.
Kristiauia. (dbondon : Willimus k Norgaie.) 1912. Pp. 238. lO.s.

WoiTLiN (Nils). Den Bvonska Jordstyckningspolitiken i de
lR:de otdi 19:de Arhundradena. Stockliohn : P. A. Norstodt.
1912. Pp.xiii4-852.

THE ECONOMIC JOURNAL

JUNE, 1913

COMPARATIVE ECONOMIC HISTORY AND THE
ENGLISH LANDLORD.'

It is now some thirty years since I began to interest myself
in economic history, under the converging influence of three very
difierent men — Stubbs, Toynbee, and Schrnoller. And, looking
back, I am conscious of a great change in the academic atmo-
sphere. I should not like to speak for Germany or France or
Russia,, or the other countries of the European continent; but
for England and America this much can safely be said : that
the study of specifically economic history is no longer an
individual eccentricity, calling almost for apology; it is now a
recognised and respectable scholarly pursuit. And this is
evidenced by a circumstance the very mention of which may
cause our foreign friends to smile, but which is quite significant
in British circumstances : economic history has been given a
place in our university examinations. At the Universities of
Cambridge and London, and at most of the newer Universities,
examination papers are every year set in the subject, and some
hundreds of students do their best to answer them. Con-
sequently there is now something like an academic career opening
before scholars who devote themselves to this particular study.

But there is another and perhaps as significant a sign of
the times, about which our foreign friends may like to be
informed. During the last few years there has come into exist-
ence in Great Britain an extensive organisation called the
Workers’ Educational Association. It is an association of trade
unions, co-operative societies, adult schools, and other working-
class bodies, in alliance with the universities, to provide for work-
ing men and women an education worthy of citizens. The expenses

^ Presidential Address at the Economio History Section of the International
Congress of Historical Studies in London, April 3, 1913.

No. 90.— VOL. xxiii. N

168

THJS ECONOMIC JOURNAL

[junk

are met, in large measure, by grants from the Board of Education,
from the general taxation of the country. Now it is a
remarkable fact that the subject most generally studied by these
classes of working people is Economic History. Out of some
102 systematic courses of lectures and tutorial classes in the
session 1911-12, almost half, viz., 49, were on Economic History.
Economics or Economic 'llieory came far behind, with 29; and
no other subject brought togctlier more than four or five classes.
In many cases the classes proceed, in a subsequent year, from
economic history to economic theory ; in others they advance
from a more general to a more intensive study of economic
history itself, or go on to some other aspect of history — for
instance, the constitutional.

This noteworthy state of affairs would seem to have arisen, at
the outset, partly from accident, and partly from the free choice
of the working men responsible for the first “tutorial classes.”
What these working men wanted w^as, naturally; some light on
the pressing social problems of the day; but they felt, as one
of them has told me, that to approach them historically would
give “a sense of proportion and perspective,” and would make
it easier to tackle more controversial questions afterwards in an
unpartisan spirit. The example thus set has since been fol-
lowed, simply because the policy has justified itself in experi-
ence. It would seem, also, that by many working men economic
history has been welcomed not only as a preparation for political
economy, but also for its own sake : because it seems to come
nearer to answering the questions in which they are interested
than the particular kind of economic theory that is presented to
them by most English economists.

The serious study of economic questions, whether historically
or not, by the elite of the working classes is bound to have large
consequences. So far the Workers’ Educational Association has
been able without difficulty to maintain an independent and
unpartisan position. In this respect it has been more fortunate
than the only contemporary working-class educational movement
with which, for extent, it can be compared, namely, the network
of popular lecture courses organised in G-ermany by the Socialist
party. The educational work of the German Socialist party —
and by that I mean not so much its propagandist activity, which
naturally stands in the forefront, as its zeal to awaken working
men and women to intellectual interests generally, whether
through natural science or art or history — this work has hardly
attracted as much attention as it deserves. Yet party zeal is

1913] COMPARATIVE ECONOMIC HISTORY AND THE LANDLORD 167

hardly separable from party narrowness ; and the Workers’
Educational Association gains something frcm its freedom from
entangling connections.

All this increasing attention to economic history, alike in
working class and in undergraduate circles, makes it imperative
there should go on, side by side with it, the keenest and most
critical scientific research in every part of the field. The danger
of over-hasty formulation, the dauger of undue emphasis on
particular facts, are certainly not less in these days of social
IX)litics than they were in the days when ecclesiastical history, or
in those latei> days when constitutional history, led the way
in becoming a subject for specialised teaching. Q'lis custodiet,
it may be objected, custodes Professors themselves have

their bias and their passions, the more dangerous because they
are commonly^ unconscious. We greatly deceive ourselves if we
suppose that historical, political, legal, and economic subjects
attract attention, even in ovr calmest seats of learning, merely
on account of, or in proportion to, their scientific sociological
interest ; that the typical schola^* is objective and detached from
contemporary motives. As a matter of fact, the bulk of the
important work done at the universities in these fields has
always been inspired by interest in the problems of the day ; and
“tendency is only a matter of degi-ee. So far as a remedy is
possible, it is to be sought in a consciousness of the danger.
The way to overcome bias is to realise what our own individual
bias is likely to be, and to suspect ourselves accordingly. Help
also wdll be given by a multiplication of investigators, so that no
dubious conclusion shall long remain uncriticised by a brother
scholar of differing “tendency.” And if the critic comes from
another nationality, there is. even more chance that he will see
the common subject-matter with fresher eyes, and eyes that, if
prejudiced at all, are prejudiced in a different direction.

This thought brings me to a theme on which it may not be
inappropriate that 1 should dwell for a few minutes on this
occasion : the strikingly international character of recent inves-
tigation in this particular subject. It is surprising how large a
part of the best work — certainly this is true of English economic
history — has proceeded from foreign scholars. This has been
the result of their essentially practical purpose. They have
turned with interest to the social history of a land not their own
because it preceded their country in its development, and might
therefore indicate dangers to avoid or precedents to follow. Thus
Marx and Brentano and Held and Schufze-Gavernitz and Levy

N 2

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have examined the industrial history of England, because Eng-
land preceded GTermany in passing through “the Industrial
Kevolution.’* And while Germans have led the way in the
scrutiny of manufacturing development, Russian scholars, in
more recent days, have thrown themselves with eagerness upon
agrarian history. I need but mention such names as Kariiiew and
Eoutchisky and Kovalevsky for their French inquiries, Vino-
gradofif and Ravine for their English. The obvious reason is that
Russia has been confronted of late with the prospect of a vast
agrarian fransformation, and her patriotic scholars crave for every
possible glimmer of light upon their j^ath that the experience of
other countries can be made to furnish. That they may find such
light we must all hope; but, in any case, their keen curiosity
is of great service to the history of the countries they turn their
attention to.

I am aware 1 am entering upon a somewhat perilous topic if
I attempt now to illustrate the international character of our
study from a subject that engages just now a good deal of atten-
tion in this country, viz., the ownership and tenure of land. I
realise that the whole group of problems which it includes is still
full of obscurities ; but it may be possible to state the present
position of historical investigation in a way to command the assent
of scholars. In what I sha^ll have to say 1 shall have England
chiefly in mind. But it is certain that in the Middle Ages there
was a substantial similarity of social conditions over a large part
of Western Europe; and it is from that fact, as we shall see,
that w^e get sometimes the greatest assistance and sometimes the
greatest hindrance in our inquiries.

It is evident, to begin with, that the historian of English land
has no longer the same clear and well-defined starting-place as
his predecessor set out from, forty years ago. Then the historian
could assunui that he knew with wdiat conditions the development
began at the outset of English history, as surely as he knew in
what conditions it has ended ; his task w^as to fill in the inter-
mediate stages. What that starting-place was it is hardly neces-
sary that 1 should give time to describing : it was “the farmer
commonwealths, “ displayed with all the emotion of admiration in
the opening pages of Green, and clearly discernible beneath the
cautious phrases of Stubbs. These occupied the centre of the
picture : differences of rank and w^ealth and status all fell into a
dim and easily-forgotten background ; and the problems for the
historian were conceived to be these : how did the freeman sink

1913] COMPABATIVE i^OONOMIC HISTOBY AND THE LANDLOBD 169

into serfdom ; how did landowning communities fall into subjec-
tion to manorial lords?

Now it is significant that nothing of all this had suggested
itself to English historians so long as they confined themselves to
English evidence; no trace of it is to be found, for instance, in
the pages of Hallam. It was imported into English history by
Kemble, as a result of his German studies : he assumed, with
entire good faith, that what was apparently proved for Teutons
at home must have existed among Teutonic peoples in Britain,
and he looked round for English evidence which would fit into
the construction. It was imported again, and with more
authority, by Stubbs. No one can look at the footnotes of his
earlier chapters without seeing that he builds on the foundations
assumed to be laid for Germany by Maurer and Waitz.

The reputation of German scholarship was deservedly so high
that, so long as German historians were unanimous, no criticism
from outside carried much weight. And for a time the Maurer-
Waitz tradition went on establishing itself only the more im-
posingly, in the economic histories of Inama and Jjarnprecht, and
in the legal history of Brunner. The acute criticism by Fustel
of the whole range of Homan, Merovingian, and Carolingian
evidence, the essays of Denman Boss, the realistic treatment of
the English material by Seebohm, were alike waived on one side.
Instead of asking how room was to be found in the picture for the
facts called attention to by Fustel and Seebohm, it was common
to chara>oterise these scholars summarily as isolated advoc’.ates of
a rival theory — the theory that the manor grew out of the Roman
country estate. And the more we realised from Hanssen and
Meitzen and from Seebohm himself the system of cultivation in
thew Middle Ages, with its open fields and intermixed holdings and
rotation of crops and common pasture, the more obvious it seemed
that the Roman villa could hardly by itself account for Grundherr-
schaft, seigneurie^ and vuinor.

No fresh advance was possible until a new movement took
place among German scholars themselves. It is notorious that
since 1896 such a movement has made its ap]-)earance. I need but
mention the names of Hildebrand and Wittich and Knapp. These
writers have compelled a reconsideration of the accepted inter-
pretation of Tacitus and the Barbarian laws and the early land
charters and the capitularies. Moreover, it is no longer plausible
to say that the Waitz-Brunner interpretation of the period a.d.
400-800 must be correct, inasmuch as it fits in with their inter-
pretation of the period a.d. 800-1000; since Dopsch is now

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showing the extreme insecurity of some of the apparently most
firmly established propositions even as to Carolingian institutions.

The authors I have just named are by no means as yet in
possession of the field ; the old positions are still being defended ;
and we must certainly not be in a hurry to proclaim any large
new generalisations. If I venture to sum up what seem to me
the conclusions suggested so far. it is only in the most tentative
way. They would be these : That from the earliest historical
times, in (hiiil and Germany, very much land w^as owned indi-
vidually, and that wealth on the one side and slavery and personal
dependences on iho other were always very important factors in
the situation; that in Nenstria and the other more completely
Romanised parts of the Colto-Germanic world, the Roman villa
was very generally one of the main elements, perhaps the
dominant element, in the development: and that the seigneurial
structure of the western side of the Carolingian Empire had a
considerable influence on the somewhat subsequent development
of the eastern side; tluit, even in Germany, communal owner-
ship of land w^as never a fimdamenta.l or generally pervasive social
institution; that there wais something very n»uch like large
private estates, worked by dependents and slaves, from the very
earliest days of Teutonic settlement; and that “the common
freeman,'’ tliougli j)r()bably in a sense the basis of iho legal system,
was neither so })easant-like, ‘nor so uniform, nor so communal,
as we used to suppose,. There is much to be done beford the
ditTereni })arts of the pu/.zK'. can be satisfaxdorily fitted together;
possildy tljcn*, were large dilTerences, not imly as between Nenstria
and Austrasia, but also within the purely German territory itself.
Moreover, the whole specifically agricultural side — the inter-
mixed strips and all tlicv involve- has still to be brought i^to
relation to the l(‘gal side of the problem. We cannot fail to be
struck by its omissioji even in so substantial a treatise on the
lines of Enstel as that of See. As to England, 1 am afraid that,
in spite of the labours of Maitland and Vin^ogradoff, we must wait
for the solution of our local problem until a solution has been
reached of tlie larger Continental problem. But this much is
already highly probable, viz., that w^e shall not find anything that
can fairly be called a general communal system of landowning,
combined with a substantial equality among the majority of
the people, under conditions of .settled agriculture. To find it
in any seiise we sliall have to go back to an earlier and “tribal ”
condition ; if, indeed, we sliall find it there.

For some time to come it will probably be advisable for

1913 ] OOMPABATIVB ECONOMIC HISTOBY AND THE LANDLOBD 171

economic historians, in their popular expositions of agrarian
development, to content themselves with starting with tte manor
(Grundherrschaft, seigneurie) as we find it over a large part of
England, France, and Germany in, let us say, the thirteenth
century, without committing themselves to any very confident
assertions as to how it came into existence. It is true we have
been warned by Maitland not to speak too freely of the “typical “
or “normal” manor; he has pointed out how rich a diversity of
conditions is to be found existing contemporaneously even among
English villages and hamlets, so that it is not at all difiScult to
find abundant cases quite irreconcilable with each of our usual
generalisations. Yet certain features are so commonly found in
mediaeval village life — features sufficiently indicated by such terms
as demesne and yardland (hufe) and week work — as to be t 3 ^pical
of the greater part of rural existence over a large portion of
Western Europe. Everywhere half or more of the tilled land was
in the hands of small peasant cultivators. The terms on which
most of them occupied their holdings w^ere, indeed, onerous ; and
we must take care not to depict their condition in colours too rosy.
Yet there they w^ere, alike in Central and Northern France, in
Southern and Middle England, in Western and Central Germany.
But to-day we find, of course, by no means the same uniformity
on comparing the throe countries. Over a large part of Germany
and France the place of the serf cultivalors of the Middle Ages
has been taken by peasant proprietors. Agricultural statistics are
everywhere curiously defective ; but it is jiretty safe to say that in
France soraewdiere about one-half, and in Germany about tw^o-
thirds of the land is now in the hands of peasant proprietors.
Such large properties as are now found in France seem to be
pretty widely distributed over the whole country ; in Germany, on
the other hand, there are considerable provinces, such as Bavaria,
where there are practically, over great stretches of territory, no
large properties at all. But wdien wn pass over to England we
find to-day exceedingly few peasant properties. The great bulk of
the English land belongs to large landowners, not cultivating
their land themselves or through a bailiff, as is the usual practice
with such large landowmers as there may be in Germany or
France, but letting out almost all of it to comparativ(3ly large
tenant farmers, who employ agricultural labourers dependent on
wages. The question to which I now turn is the explanation of
this striking singularity in English development.

I do not propose to estimate the relative merits of the English
and Continental systems. It is noticeable that writers on agri-

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cultural j^conoiiiics in Germany usually assume that a system of
peasant proprietorship — especially when it is so diversified that
the landless labourer, if he exists at all, has a good chance of
rising to be a small landowner himself — is obviously the more
desirable, on general social grounds; though they throw in, by
way of concession, the observation that a certain number of large
landowners n)ay possibly be of use in leading the way in the
improvement of agricultural methods. Writers in England are
wont to take the opposite jK)int of view : to assume that the
English system is the better as regards economy of agricultural
production ; though they in their turn may throw in an observa-
tion, by way of concession, as to the social benefits of peasant
proprietorship. I leave all these questions on one side, and confine
myself to the purely historical problem, how the difference between
England and the Continent actually came about.

On the external facts of the development in England we are
much better informed to-day than w^e were evcm twenty years
ago. ''.rhe works, for tlu^ earlier centuries, of Page and Gay and
8avine and Tawney ; foi’ the later centuries, of Hasbach, Slater,
Johnson, Prothero, Gonner, and the Hammonds have made
tolerably clear almost every one of the })rocesses involved. The
first two of the names I have recit(‘d — Page and Gay — are
American scholars; the third, Ravine, a Piissian scholar; and the
large positive additions thesfe three have made to our knowdedge
illustrate what I have already said as to the value of a foreigner’s
freshness of vision. Thanks to these, and to the others I have
mentioned, wdiile theie are still some outstanding obscurities as
to co])yhold and leasehold, in the main tve know what happened.
We must agree with lecent writers in describing the modt*rn
reorganisation of rural England on the lines with which we are
now familiar as tlie work of “the governing class that ruled
Ejngland during the last century of the old rnjimc/* We might add
that this class commonly believed that what w^as for their personal
advantage was also for the advantage of the community ; that by
far the greater part of the rearrangement of owmership and tenure
took place under legal forms ; tliat it involved on the ]mrt of “the
governing class ” both enterprise, and expenditure ; and that the
more obviously injured interests received some pecuniary or other
comj>ensation. Whatever additions, how^ever, we may think fit to
make, it is still true that it was “the governing class” that was
responsible. But this is no answ^er to the question why it w^as
in England fhat this singular transformation took place. For, at
the period from which w^e start, other countries had an upper class

1913] COMPARATIVE ECONOMIC HISTORY AND THE LANDLORD 173

of much the same sort as England ; and there is no reason to
believe that the English upper class was by nature either more
selfish oi^more enterprising.

Let us see if any light is cast upon the matter by the experi-
ence of other countries. And let us begin with the explanation
of the introduction of the present English system which seems to
lie on the surface. No one can read eighteenth-century history
without being continually reminded of the widespread zeal in
England among the upper classes for the im})rovement of agri-
cultural methods. We learn all about Arthur Young, his eulogy
of ‘‘spirited*’ landowners, and his abhorrence of open fields and
commons. But when these facts are adduced to “explain” the
English deveIo])ment, it should at once occur to us that there was
a )>recisely similar movement in France, the same enthusiasm for
agricultural science, the same formation of agricultural societies.
In France, as in England, it was deemed enlightened in govern-
mental circles to abolish common rights and carry through enclo-
sures ; and the French edicts for these ])urpose8 were the direct
outcome of the re]>resentations of the agricultural societies. Yet
the “agronomes” had nothing like the same influence in France
as is sometimes ascribed to them in England.

Writers who have gone beyond this first and most plausible
explanation have sometimes been inclined to lay stress on the
influence of the economists, at any rate on the final stages of the
movement in England. With the one striking exception of John
Mill, the economists of the first half of last century favoured both
large ownership and large farming. We know how Bcntham
“thought the spectacle of an enclosure one of the most reassuring
of all the evidences of improvement and happiness ” ; we know
how McCulloch described the agricultural system of his day avS
“the powerful spring which has contributed more })erhaps than
any other to carry our commercial and manufacturing prosperity
to its present unexampled height,” and how he warned the people
of his generation not to give “the smallest countenance to any
scheme either for dividing estates or for building cottages on
wastes ” ; we may recall how Porter, the statistician of Free
Trade, condemned Goldsmith off-hand for “so ignorantly”
deploring the disai)pearance of the peasantry. Such encourage-
ment from the economists in one generation, like the encourage-
ment from the agronomes in the preceding generation, must have
given additional momentum to the forces of change : a modest
landowner, who took his economics from its accredited exponents,
would carry through enclosures and buy out small owners and

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[JUNE

pat .farms together with a glow of moral satisfaction. And yet
we can attribute as little primary importance to Political Economy
as to Agricultural Science ; for the plain reason that itswoice was
heard as distinctly and much earlier in France. It was, I
need hardly say, the French Economistes of the eighteenth
century who su))plied the postulates and sketched the ground-plan
of the later orthodox Political Economy of England : and one of
the services of the Kiissian scholar Kareiew has been to remind his
readers that the whole irend of thought of the Economistes was
opposed to peasant fanning. Quesnay, in his famous Maxims,
had laid down ihut “lands devoted to corn crops should be brought
together, as far as ])ossible, in large farms, managed by well-to-do
agriculturists,” since “it is not so much men as capital that
needs to be attracted to the country.” The tripartite division of
the agricultural population into landlords, capitalist tenant-
farmers and wage-eaining labourers, which we find assumed by
Adam Hinith and Picardo, and which we are wont to explain as
the unconscious reflex of contemporary conditions, appears just as
clearly in the much-read writings of the Economistes. There it
is presented as the obviously best arrangement, inasmuch as
it promoted the greatest net produce : and this was at a time when
the large ten«nnt-farmer, ihough here and there he could be found,
was by no means so characteristic of France as he was fast be-
coming of this country. When the princes of Savoy were carrying
through that exproprialion of the seigneurs which afterwards
served as a potent example for France, “}>hysiocratic ” argument
did what little it could to stay their hands. Bead the Reflections
of the “godlike ” l^irgot, wdth their dogmatic assertion of the need
for “ca})italistes cntrcf>reneurs de culture,” and of the j)arallelism
of manufacture and agriculture, both requiring the separation of
“entrepreneurs” from “simples salaries”; and one will realise
that the essentkil f)rinciples of English “high-farming” received
their earliest and quite conscious formulation not in England but
in France. And yet, again, the doctrine had obviously nothing
like the same effect in France as might jdausibly be attributed to
it in England.

The explanation of the difference between England and other
countries is sometimes sought for in heroic acts of continental
legislation. In ])articular, two episodes have engaged admiring
attention : the land legislation of the French Revolution and the
legislation in Germany of Stein and Hardenberg. But as to
France, recent research has confirmed in sxibstance the view of
de Tocqueville, and has shown that the Revolution made no funda-

1913 ] COMPARATIVE BCONOMIC HISTORY AND THE LANDLORD 175

mental material change in the general position of affairs. The
long and heated controversy on the subject finds its explanation
in the ambiguous word “proprietor.” Probably not much more
land was held after the Revolution by peasant “proprietors ” than
was held before by “ censitaires ” and other classes of customary
tenants under their respective seigneurs. Their position was sub-
stantially the same — with all the complicated technical and
practical diversities and obscurities — as that of copyholders in
England. Who was the “owner” of their land was a question
which could not have been answered in the feudal ages in the
modern sense, since ownership in the modern sense did not
generally exist. The seigneur him.self in legal theory was a
“tenant” of the land, holding it of the King or of some other
suj>erior lord. But when the feudal theory died away, and it came
to be held that there must somewhere he an “owner” for ench
piece of land, the question who owned the ccnsitaire's or copy-
holder’s land might be answered in two op])osite w^ays. Owner-
ship might be said to be vested in the lord, subject to the rights
of the censitaire, or in the censifairey subject to the rights of the
lord. If we take the former view’ — possibly the view most gener-
ally current among lawyers — the French Revolution, by abolish-
ing the lord’s claim to certain dues, converted tenancy into owner-
ship, and so created [)easant proprietor sluj). But the latter view^
was so natural even before the Revolution that those censitaires
who could not be dispossessed so long as they paid their dues, and
who could dispose of tlieir holdings ])ractically as they })leased —
and of these there were many — were already commonly spoken of,
in popular parlance, in administrative reports and even in some
of the law books, as “])roprietors.” The rough-and-ready estimate
of Arthur Young that small owners held one-third of the land is
confirmed by the most recent statistical researches based on the
tax-rolls. Thus, according to Ijoutchisky, peasant “proprietors”
held 30 per cent, of the land of the Ijaon district before the
Revolution ; wdiile the similar researches of l^loch assigns to them
as large a share in the Orleans district as i4 per cent.

What the legislation of the Legislative Assembly and the
Convention did for these “proprietors” was to put them into an
easier position by freeing them completely from scigneurial dues,
and so to enable them the more successfully to maintain them-
selves during the coming century. At the same time it converted
into proprietors a good many occupiers of land whose tenant-
right had not hitherto approached so nearly to ownership ; like
the holders of the terminable leaseholds characteristic of Brittany.

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[JUNE

to the effect of the sale of the confiscated lands of the church
and of the emigres, that is a question which cannot be regarded
as so nearly approaching definite solution. Recent investigations
seem to show that, though the lion’s share went to the bour-
geoisie, a good many of the peasants, and even of the mere
cottagers, were able to acquire small portions. So that the net
effect of the Revolution was both to strengthen and also some-
what to increase peasant proprietorship. But it would not have
been able to do this if a population of peasants, whether small
owners or customary tenants, had not still remained on the soil.
The contrast with England where, by this time, according to
Arthur Young, “small properties** were “exceedingly rare,’* is
unmistakable.

The Stein-Hardenberg legislation is commonly thought of in
England as having created a |)easant proprietary in Prussia; and
a desire is soinetiyaes expressed that a statesman would arise in
this country strong enough to follow their example. But, when
we look into it, w’e discover that it effected, in a much more
limited way, what w^as effected in France : it improved the
position of many peasants already planted on the soil ; it did not
place them there. The really “epoch-making” book of Knapp
makes it very clear that the Prussian measures were “very far
from being models of social legislation.” We might already have
guessed this if we had reflected that the provinces concerned
were part of that “Ostelbien,” w'here — from the point of view^ of
admirers of peasant proprietorship — conditions have for some
time been very markedly inferior to those in any other part of
Germany. Those peasants who w-ere converted by the measures
of Stein and Hardenberg into independent proprietors had to
surrender from a third to a half of their holdings in order to
compensate their lords for the loss of their labour semces ; and
the privilc'ge of enfranchisement was limited to “peasants”
(Dauerti) in the narrowest provincial sense of the wxud, viz., to
those whose holdings w^rc worked with a yoke of oxen. It v;as
limited, that is to say, to the larger holders; to those wdio in
medueval England were called “full villeins” and “yardlings.”
Smaller customary tenants — from “ half-yardlings ** (to use, an
English term again) dowm to the various grades of cottiers — w^ere
disregarded. These — from the operation of economic forces and
the exercise of the legal rights of their landlords — soon fell into
the position of landless labourers, compelled, in order to secure
a livelihood, to work on the Ritterguter (or gentlemen’s estates).
Knapp does not hesitate to say that the exclusion of small holders

1913J COMPAKATIVE ECONOMIC HISTOBY AND THE LANDLOBD 177

from the opport unity of enfranchisement, and the contemporary
withdrawal of the protection they had previously received from
the government (to this I shall return) constituted the compen-
sation, insisted upon by the landlords, for the sacrifice of their
previous legal claims upon the larger holders. The estates of the
Junker were enlarged ; and at the same time they were enabled to
dispense with the services of their larger tenants by having this
new class of landless labourers put at their disposal. 'I’he class
whose ill-fortunes in England have lately been set so poignantly
before us — the class represented by the agricultural labourer —
was precisely the class that came off worst in Prussia also.

The case of Prussia does, however, throw some light on the
historical problem as it presents itself in England. How came
it that in 1807-11 there were still so many peasant tenants in
Prussia? The answer is to be found in large measure in the
policy of “Protection of Peasant Land,*’ pursued by the rulers
of Prussia, as by the rulers of Austria and other paternal princes
of the eighteenth century. The edicts issued by the Prussian rulers,
almost as soon as they had freed themselves xroni the cmitrol
of their provincial parliaments, and actually enforced from 1749
to 1808, prohibited any decrease in the extent of land held by the
peasants. They said nothing of any legal rights the peasants
might possess, for the obvious reason that the majority of them
[>ossessed at most only a life interest. So far as the Government
was concerned, the lord might put in whom he pleased as tenant,
but he must not add a j>easant holding to his demesne. The
policy, which was undoubtedly successful in achieving its object,
was based not on humanitarian grounds but on reasons of State :
a decrease in the number or size of peasant holdings was believed
by the Government to be bad for the revenue and bad for the
army. It gives one a curious sensation, after reading the careful
expositions which Knapp has written of Hoheuzollern policy in
the eighteenth century with his eye fixed exclusively on Prussia,
to turU to the agrarian troubles in England of fhe Tudor and
Stuart times. Listen to Lord Bacon, writing a century and a
half before Frederick the Great. “When,” he says, “enclosures
began to be more frequent, whereby . . . tenancies for years,
lives, and at will, wdiereupon much of the yeomanry lived, were
turned into demesnes . . . the king (Henry VII.) knew full well
. . . that there ensued withal ui)on this a decay and diminution
of subsidies and taxes ; for the more gentlemen ever the lower
books of subsidies.” Moreover, Bacon continues, “the principal
strength of an army consisteth in the infantry ” ; and “if a state

178 THE ECONOMIC JOUBNAL [jXJNfi

run most to noblemen and gentlemen, and the husbandmen and
ploughmen be but as their workfolks and labourers . . . you may
have a good cavalry but never good stable bands of foot.” The
Tudor and Stuart legislation, prohibiting “the letting-down of
houses of husbandry,” was of precisely the same character as the
legislation of enlightened autocrats on the Continent a century
and a half later, like that, it disregarded the legal question of
the husbandman’s tenure, and probably for the same reasons:
that his legal right was either weak in itself, or afforded scant
protection against social or economic pressure. It came earlier
than the parallel legislation abroad, because the growth of the
woollen industry furnished in certain districts of England a
powerful motive for the incorporation of peasant holdings into
estates managed on capitalistic lines long before a like tempta-
tion presented itself in Germany. Tawney, the most recent
investigator of the j^eriod, concludes that the efforts of the
English government did “mitigate the harshness” of the earlier
enclosing movement. I should myself be inclined to conclude
that the destruction of the old agricultural system would have
gone much further even in the Tudor period but for the check
imposed by the executive. And it is signilicant that the last
serious attempt to enforce this check was made by the Sluart
Council in the very period w'hon, for the last time, it was able
to carry on government free from the control of Parliament
(1629-1640).

This last reflection brings us to the heart of the matter. All
the freshly-acquired information as to the course of events in
England and abroad confirms by additional considerations wdiat
Toynbee said as long ago as 1881 : “the present distribution
of landed property in England is in the main due to the
system of political government which made us a free people ” ;
in other w^ords, to the establishment of parliamentary govern-
ment in the seventeenth century. Parliamentary government,
in the circumstances of the time, could only mean the rule of the
landed gentry ; and these w^ere led, by the strongest motives of
political zeal and personal interest combined, to widen and
tighten their hold upon the land. And the local authority of the
squires as justices of the ^>eace, which Gneist so oddly christened
“ Self-government ” in order to contrast it with bureaucracy, was
but the reverse of the medal of which parliamentary Self-govern-
ment was the obverse. Those who think that England could
have had the one without the other might be referred to the
impartial pages of the French publicist Boutmy.

1918] COMPAEATIVE ECONOMIC HISTOEY AND THE LANDLOEO 179

The growth of the mercantile and monied interest gave addi-
tional impetus to the transformation of rural life by adding enor-
mously to the wealth available directly, and indirectly through
marriage, for the rounding-off of country estates. There were
wealthy city men in France also ; but the movement of capital
countrywards was less than in England because the inducement
was less. The withdrawal from the country gentry in France of
all powers of local administration went on pari passu with their
loss of influence upon the central government : both losses made
the position of a country gentleman less desirable. And the very
characteristic of our social system of which we have been most
proud, the fact that England has no close caste of noblesse,
operated in practice to strengthen landlordshi]), by adding to its
pecuniary resources and commercialising its spirit.

The triumph of Whig principles in 1689, by placing the
legislative and executive authority in the haijds of the squires,
put an end in England to the policy of J^easaiit Protection.
It is to be noticed, also, that parliamentary government was
associated with an actual increase of the geographical area
over which landlord forces could operate. In reading the works
of Knapp and his school on the Liberation of the Peasants in
the several States of Germany, wo are constantly reminded of
the importance of the sovereign’s own Domain. It was there that
the benevolent autocratic princes of the eighteenth century could
most readily convert, if they so chose — and they commonly did
choose — a population of peasant tenants into one of peasant pro-
prietors. Thus, soon after 1776, Maria Theresa not only freed
the serfs oq the royal manors in Bohemia and Moravia, but
actually divided up the large demesne farms found in each manor
into small hereditary holdings at moderate quit-rents. Frederick
William 111. of Prussia in 1799-1805 did not go as far as this,
but he did at any rate convert the peasant tenants into owmers.
Even more significant, perhaps, is the present aspect of Mecklen-
burg. That province is sharply divided to-day between, on the
one hand, the land of noble estates wdth their day labourers, and,
on the other, the Domanium, covered with peasant farms of all
grades, from cottages with small hereditary plots attached up
to small and large peasant properties. The Government could set
about establishing a state of things like this as late as 1846
simply because it had kept its hold on the Crown lands. But
in England the Crown lands, which in 1660 still brought in an
income of more than a quarter of a million pounds, produced not
a sixth of that sum at the accession of Anne. In forty years they

180

THE ECONOMIC JOURNAL

[JUNE

had almost all been granted away. Exactly to what extent this
happened under the last two Stuarts, to what extent under
William III., it is not easy to discover. The matter was bitterly
fought over between Whigs and Tories in the reign of William
of Orange. But it is evident that the final destruction of the
Royal Domain took place under the first Parliamentary sove-
reign ; and also that the Whig doctrine of the Parliamentary
Power of the Purse necessarily involved the disappearance of the
Domain as a substantial source of royal income.

1 have but one more foreign lesson, but that most significant.
Brentano has wiitten an illuminating essay on the question, “To
what is dui^ the pre[)ondorance in Bavaria of })easant proprietor-
shi})?“ His answer, in brief, is this: Rather more than half
the land of the duchy belonged in the seventeenth and eighteenth
(centuries to the church, i.e., to various ecclesiastical bodies. The
management of th^-se estates and of the peasant holdings of which
they were for the greater part composed — like the management,
as Brentano remarks, of church property in Europe generally —
was considerate but conservative : it introduced no large reforms,
but allowed things to go on unchanged ; so that even serfdom
{Leibeigenschaft) continued here and there to exist in name,
tliough in the course of time it had become merely nominal. The
main [)oint is that the peasants actually remained 6n the land,
down to the time (1803) when the church lands were at last
secularised and passed into the possession of the State. Only less
important were the political result s of the retentiou by 11 le church
of its landed }>roperty. Both for reasons of self-interest, and also
from gratitude towards princes who championed the Catholic
cause, the church was ready to make large grants to the sove-
reign ; and its territorial wealth gave it the means. Rendered
by such grants independent of their nobility, the princes of
Bavaria were able to dispense with j)ar]iament (Landtag). There
was no provincial parliament between 1612 and 1669, and no
parliament at all from that date till the close of the eighteenth
century. The gentry might wish to exact heavier services from
their tenants or to enforce a preferential claim on the labour
of their younger sous, but the prince was free to disregard their
desires. And as the lay lords could not annex peasant holdings
to their demesne farms without a larger command of labour,
they had no alternative but to leave them as they were. Thus
Bavaria remained a country of peasants, both on church lands
and on noble lands, right into the nineteenth century. When
the government finally, in 1848, took the matter in hand,

1913] COMPAEATIVE ECONOMIC H18TOBY AND THE LANDLOKD 181

enfranchised the peasants, and took measures to convert them
into proprietors, there was no powerful landlord interest, as in
Prussia, to insist upon the surrender of a large part of each
peasant’s Holding in return for the abolition of seigneurial
rights, and redemption was effected on extraordinarily easy
terms.

It is hardly possible thus to learn the reasons why peasant
ownership predominates in Bavaria without drawn'ng some pretty
obvious conclusions for England. We know% of course, that the
confiscation of the n)onastie estates in 1536-9, and the passage,
by gift or easy terms of sale, of this additional fifth of the land
of the country into the hands of lay lords and gentry, did much
both to create the great Whig houses of the eighteenth century,
and also to enrich those substantial gentry, like the Cronnvell
family, wdio formed the strength of the Puritan party in the
century previous. This, Tlallatn long ago told us, “was of no
slight advantage to our civil constitution, strengthening and
infusing new blood into the territorial aristocracy who wa^re to
withstand the prerogative of the crown.” Ihit on the other side
of the account must be set the fact that it iiicr('as('d the area of
land subject to the influence of lay landlords, and by contri-
buting to make the king dependant on a parliament of landed
gentry, it put it out of his jwvei’ lo protect the peuisantry like
liis German contemporaries.

And now perhaps we can answ^er the tpiestion why tlui
English land system differs from that of E^rance or G(U’inany.
Elngland owes its present land system, with all its merits and
demerits, to the operation on the ii])per classes of the ordinary
motives of self-interest. These classes w^'re enlarged and
strengthened by the growth of trade : and they were set free to
carry out their wdll — and this, after all, was the main thing — by
the triumph of the Beformation and the victory of Parliament.

W. J. A SULKY

No. 90.—VOL. XXIII.

DUMPING AND THE TINPT.ATE TNDUSTKYA

It is a matter for regret that English economists have paid so
little attention to South Wales, for the northern land boundary
of the ].-lristol Channel comprises one of the most interesting
industrial areas in the country. The industrial changes of the
last half-century,* and the social consequences of such changes,
provide an important chapter in modern economic history. South
Wales is to-day exceedingly prosjwous, the distribution of wealth
among the various classes of producers is less unsatisfactory than
elsewhere, and poverty due to industrial changes is practically
non-existent. Moreover, the configuration of the country is such
that, except in the coal regions of North Glamorgan, industrial
development has not yet been able to destroy the amenity of the
towns and valleys as places of residence.

The most obtrusive manufacturing industries are those
engaged in the production of steel and tinplate. ])uring the past
fifteen years the tinplate industry has been one of the most stable
and pros]>eroLis in Great l^ritain. It depends mainly u})on foreign
markets, and only about a quarter of the annual production is
consumed at home. Until 1891 more than seventy per cent, of
tlie ex])orts were shipped to the I'nited States ; but the imposition
of a ])rotective duty under the McKinley Act led to the establish-
ment of an American industry which, before the end of the
century, was able to produce all the plates required for home
consumption. A rebate of 99 jyex cent, of the import duty is
allowed upon re-exports, and for the past dozen years “rebate
orders*' alone have been placed in South Wales. But although
other foreign markets have now grown numerous, and the
relative importance of the United States has diminished, so large
is the rebate order that Uncle Jonathan remained the largest
customer until about two years ago. In most of the other foreign

^ Based on a paper road before ilio Economic Section of the British Association,

1912 .

1913]

DUMPING AND THE TINPLATE INDUSTRY

183

countries Welsh manufacturers enjoy a complete or partial
monopoly, and the demand for the article has increased fairly
rapidly and continuously.

The labour conditions in the tinplate industry repay investiga-
tion. Men, boys, women and girls are employed. The majority
of the factories are well appointed, the wages paid are as high as
those obtained by any group of industrial workers in the country,
and the conditions of employment are exceptionally good. Piece-
workers (wdio art' in a large majority) enjoy an eight-hours day ;
the work is fairly congenial, and most of it calls for considerable
skill. Labour is nowhere better organised than in this trade.
Although the industry is strongly localised, and, apparently, well
adapted to control by a single highly centralised union, the work-
men are distributed among six associations. Since 1900 a Ccn-
ciliation Board has been in existence, ipyon wliich, for the last
few years, all the unions have been represented. Wage agree-
ments are made annually, and once only has a dispute regarding
the wage-rates resulted in a serious stoppage of wx)rk. But since
the conciliation board was established at the beginning of a period
of prosperity which has continued without serious interruption,
it is difficult to say what strain it will bear. Although the
standard rates have remained practically constant since 1874, the
w^eekly earnings of the workmen, in consequence of im])rovement8
in machinery and jdant, have been in many cases doubled, and
in all cases considerably increased.

While these and other subjects call for nltention in an
examination of changes in economic organisation, we shall be
mainly concerned, in this article, with tla^se cliarigos in the
relations of the steel and tinplate industries j>roduced by recent
importations of sheet and tinplate bars. Little, if any, written
material is available^ for not even those journals fuibJished in the
interests of the iron and steel trades have devoted much attention
to the subject. In view of the unsatisfactory nature of part of
the evidence upon which they are based, some of tlie conclusions
here stated may require modification ; but such tests of accuracy
as are possible have been made, and the main contentions are
probably closer approximations to the truth than 'were the un-
guarded utterances of controversialists during the recent discus-
sion of fiscal policies.

A tinplate is a thin sheet or plate of steel which has been
coated wdth tin for the puri>ose of protecting the steel from the
action of acids and the effect of exj)osure. From tinplates are
manufactured petroleum cases; cans for packing fruit, vege-

184 THE ECONOMIC JOUENAL [JUNB

tables, and meat ; dairy utensils and boxes for holding biscuits,
cakes, tobacco, &C. The Welsh industry was first established (in
the eighteenth century) to provide a market for the iron produced
in the district : it was in every way subsidiary to the iron
industry. A tinplate mill was but an appendage to the forge,
which manufactured other iron products as well as bars. When,
after the middle of the nineteenth century, steel gradually dis-
placed iron in many uses, the forge grew increasingly dependent
upon the tinplate mill, and the manufacture of iron bar became
a more important branch. But the two stages of manufacture —
the production of the bar and its subserjumt manipulation — con-
stituted practically one industry, and few “pure*’ tinplate works
existed. The masters’ association included makers of iron as well
as manufacturers of the finished product (generally they were the
same peojde), and the workmen’s union was equally extensive;
the “1874 list “ cbntrolled not only the rates ])aid to those engaged
in tinplate manufacture, but also the wages of the men employed
at the forge and furnace.

Between 1879 and 1886 steel w'as substituted for iron as the',
material of which tinplate was made— Plessemer bars took the
jdace of j)uddl(ul iron bars, and Siemens bars that of charcoal iroji.
The former were obtained from factories originally built for
making rails, in which tinplate bars were only afterwards manu-
factured as an exceedingly profitable subsidiary product. Tin-
plate makers have never erected Bessemer plant to supply their
needs ; for the latter requires a blast furna(*(^ and involves a much
greater exj)cn(liture of capita] than does the plant required for
the alternative jnoccss. Moreover, ever since the owneis of
Bessemer works turned their attention to the manufacture of
tinplate bars, the supply of the Bessemer quality^ has been
siifficient to meet requirements. Since tinplate made of Siemens
bar is inon* suitable for the majority of uses, the growth in demand
w^as, and is, mainly for this material; consequently new
Siemens factories were erected in the neighbourhood of tin})late
works. Although a f(nv of these were built- by tinplate manu-
facturers the most im])ortant were entirely separate. The sub-
stitution of steel for iron thus liad a disintegrating effect, and
the manufacture of tinplate became a distinct and separate
industry from that engaged in the production of the raw material,
steel or tinplate bar. Since Siemens and Bessemer tinplates are

^ BeBsemcr (acid) bars are now only used for making galvanised sheets, but
those made by the basic process are still employed in tinplate works. Bessemer
bars for the purposes of the remainder of this article refer to those made by the
basic process.

1913]

DUMPING AND THE TINPLATE INDUSTRY

186

partial (though not complete) substitutes, their market prices
rise and fall together. This sympathy in prices extends to the
bar, and anything which seriously affects the quotation for one
influences also the market value of the other.

A Siemens steel works consists of a number of melting
furnaces, together with a bar-rolling mill. In the furnaces pig
iron, scrap and shearings are melted and converted into steel.
The molten steel is then run into moulds, and the rectangular
blocks thus formed (known as steel ingots) are passed through
the bar mill and rolled into sheet and tinplate bars of the required
gauge (i.e., thickness, or weight per foot). These, when cut to
the sizes required, are delivered lo the tinplate and sheet works,
w^here they are employed as “raw' laaterial.” The Siemens steel
wwks in South Wales are highly specialised. Although rails are
made in a few’, the main (in most cases the only) product is seed
bar. Some makers supply such l)nrs to sheet-steel and galvanised-
sheet manufacturers in the Midlands, but they depend mainly —
and the remainder depend wholly — upon the South Wales
finished-steel industries for their market. A tinidatc factory
consists of two main branches, the rolling mills and the tin
house. In the former the bar is rolled into thin sheets, which
are cut to the required size. In this state they are called “black-
plate,” while the strips cut away, wdiich are returned to the
melting furnaces in the steel works, arc called shearings. The
blackplate is coaled with tin in the other department, and
prepared for the market. In some tinjdatc factoi’ies sheet mills
(similar to, though larger than, the ordinary rolling mills) have
been added, and in these the bar is rolled into sheets which are
useful for some purposes without further preparation. Again,
tinplate factories are easily convertible ijito a foim suitable for
the manufacture of galvanised sheets, and some have been
turned to this use in rec'ent years, ddius, in Uiree closely related
trades of the metal group three articles arc produced which,
within very narrow’ limits, compete with each other. Moreover,
since there is little difference between bars from which steel and
galvanised sheets are made, and those employed in the manufac-
ture of tinplates of common quality, all three compete for the
imported bar. No returns appear to be given of the quantity
used in each trade, but since the tinplate industry is much larger
than the others in South Wales it naturally provides the largest
market. ^

A tinplate factory contains several rolling mills, from eight
to twelve being fairly representative. A steel works, on the

186

THE ECONOMIC JOUENAL

[JUNE

other hand, contains but one bar mill ; and whether the latter is
fully utilised depends upon the number of melting furnaces which
feed it. A well equipped modern bar mill is capable of producing
about 2,250 tons of bars per week, while the normal output of a
tinplate mill in the same time is about 40 tons. One such bar
mill caja therefore keoj) 50 tinplate mills adequately supplied with
material. There are roughly four times as many tinplate factories
as there are steel works. At the beginning of the present century,
wben foreign bars were first dumped into this country, there
existed but little real coinp(‘.tilion between South Wales steel
producers ; each supplied a fairly secure market, and although
there app(vared to be no price agreement, the conditions in normal
years approximated io monopoly.

German and American steel works, from which sheet and
tinplate bars were sent to this country, are not so highly
specialised. They re'semble the Bessemer factories of South
Wales and the Siemens and Bessemer works of England and
Scotland; and, normally, rails, girdeTs, See., form the chief pro-
ducts. Buii by simply changing the rolls in the mills bars for
galvanising and jilating purjioses can be made. If orders for
(say) rails are not forthc'-oming in sufficient quantities to keep the
mills fully employed, they arc held back for a time, and bars
are rolled and sold abroad on a basis of prime cost. And since
the two stages arc often under single control the prime cost alone
of the i)ig iron need bo taken in estimating the prime cost of
the bar.

In 1900 th(^ monopoly hitherto enjoyed by Welsh steel manu-
facturers was endangered, and tinplate bars were imported at
prices which bore little nd'erence to the cost of manufacture.
Dumping of this character has continued at intervals up to the
present, although most of the foreign supplies during the past
four or five years have been necessary to the progress of the
tinplate industry. Welsh supplies generally fall short or run
ahead of requirements; and for some time scarcity has prevailed.
The first bars were sent over from Germany, and were of the
Bessemer quality; but when, in 1904, German makers retired for
a time from our market, considerable quantities of American bars
made by the Siemens process were imported. Since the depres-
sion of I907-'8 (winch scarcely affected the tinplate industry)
German, American, and Belgian bars have been dumped at
irregular intervals and in varying quantities. the first

period of (lumping London agents of foreign producers travelled
South Wales, and sold to the highest bidders bars which had

1913]

DUMPING AND THE TINPLATE INDUSTRY

187

already been shipped to this country on the chance of finding a
markf t ; but as trade increased orders were accepted for future
delivery.

Imported bars have usually been sold on the Welsh market at
prices varying from 7s. Gd. to 15^. per ton (generally about 10.9. ,
or 10 per cent, below the modal ^ price) low^er than those ruling
for the home manufactured article, so that at first they were
disposed of without much difficulty. But they were not so cheap,
relatively to the home product, as they aj)i)eared to be. The
purchase of the imported article was (and is yet) a different
kind of transaction from the customary one on the steel market ;
complaints w’ere therefore useless and redress was impossible.
Moreover, supplies w^ere sent to this country without any refer-
ence to the actual nec.ds of pros}>ective buyers. They w^ere
generally of the standard size, and scut over in large parcels ; con-
sequently they suited neither uinkers of odd sizes nor those who
made a considerable number of standard sizes. For not only were
the specifications of such makers extremely varied, but the
separate orders were so small that they received no attention from
the foreign producers of the raw rnalerjal.

Again, the quality of the imjKU’ted bars was at first so poor
and variable, and the gauges varied so much, even in small parcels,
that they were only suitable for conversion into plates of common
grades. They were difficult to manipulate in the mills, and
breakages of machinery were frequent. The quality (especially of
Siemens bars) has now improved, but even to-day some purchasers
of tinplate stipulate that the article which is su])])lied to them
shall be made from British steel. ^ Moreover, v hen contracts were
made for foreign bars there w^as no guarantee of prompt delivery,
and often duriiig busy periods tinplate makers found it extremely
difficult to obtain bars in tulfilmcnt of such contracts. Finally,
foreign manufacturers required a larger margin in the rolling
weight. Since this was a much more serious disadvantage in tin-
plate manufacture than in the making of steel and galvanised
sheets, the imported bar w'as better suited to the latter use. But
although damped bars were not so cheap as they appeared to be,
nor so suitable as the home product for tinplate manufacture, they
were undoubtedly useful, and relatively cheaper to those tinjilate

^ By * modal ’ I do not mean either noimal or average, but rather that price
which corresponds to the greate.st ordinate of a froquonoy curve. The phrase is
used to imply the price characteristic of the period under consideration.

The quality of a tinplate may be discovered by a "‘simple test, but it is im-
possible from this to trace its origin. Consequently the merchant is forced to accept
the word of the manufacturer.

188 THB ECONOMIC JOUBNAL [JUNB

makers who confined their attention to standard sizes and ordinary
grades.

The effects of dumping were far-reaching.

(1) The monopoly hitherto enjoyed by Welsh steel manufac-
turers was destroyed. Previously they had been able to dictate
their own terms to their best customers, the tinjdate makers.
Often they supplied the laltor only with those sizes which could
be made without inconvenience, and in quantities which best
suited iljcmselves. And Ibis |)olicy naturally proved a great
hardship to the smaller 1 inplate manufacturers. Since they were
compelled to purchase in quantities far in excess of their require-
ments their credit was sevei'ely strained — more capital was
required to carry on the trade, and interest charges were heavier.
The sur[)lus stock, too, was slowdy oxidised through long exposure'
in the yard, and its value reduced. Moreover, since the bar
makers supplied those sizes convenient to themselves, the waste of
steel in the j)roduction of jdates was c()nHi(leral)ly increased. In
short, not only were the conditions of manufacture somewhat
irritating, but the cost of production was higher than it need have
been. When the monopoly was d(‘stroyed Welsh steel manufac-
turers were cuinjadled to change their methods. They accepted
orders for small quantities, and willingly supplied bars of the
qualities and gauges required.^

(2) The second immediate result was a reduction in the prices
of st('el bar. The nwirket for this couJinodity was often seriously
affected l)y the underselling of German bars. It is true that the
latter were sent over in relatively small quantities, and that the
total excess of supply was inconsiderable. But there is no close
and obvious arithmetic relation between the extent of over-sup]>ly
and the amount of reduction in jirice ; a small over-6ui)ply may
be follow'ed by a. heavy fall in prices. And this w’as true of the
early days of dumping.

Th(^ offer of sinall (juantities of foreign bars at low'cr prices
often forced local steel manufacturers to reduce I he ]>rices of their
owm bars very considerably. Nor did this prove to be so great an
advantage to the tinjilate manufacturers as is commonly supposed.
For the smaller firms playi J into the hands of tlie merchants.

^ Some bar manufacturers tried to prevent the purchase of foreign bars by
stipulating that the shearings which wore bought from tinplate makers should be of
Welsh bars only ; others accepted shearings obtained from imported bars, but only
at a price about 30s. a ton below that paid for shearings from Welsh bars. But it
was obviously impossible to distinguish between the two ; careful analysis would
only indicate quality. Moreover such analysis was not worth the cost. They were
consequently forced to rely on the honesty of the tinplate makers.

1913]

BUMPING ANB THE TINPLATE INBUSTEt

189

They were accustomed to work with as little capital as possible
and fis much credit as they could obtain ; they relied upon imme-
diate sales and early payment for capital to continue in o]>eration.
When dumped tinplate bars appeared in this country the merchant
made use of the low prices at which they w’ere sold to ‘‘bear’*
the tinplate market, and the prices of the manufactured product
followed those of the raw material : in other words, the merchant
rather than t.he manufacturing class gained most by the fall in the
prices of steel bar.

It should not be forgotten that the small makers of tinplates
suffered in two w-ays. I'sually they sold to merchants, and
suffered from a fall in market [>riceH. But they did not, as a rule,
succeed in obtaining dum})ed bar ; and they only benefited to the
extent that foreign importations resulted in a reduction of ])riceB
of Welsh bars. German and American bars — especially the
latter — came over in shiploads’ or in large “,[)arcels,” and were
generally sold to large buyers. The latter, on the other hand,
were less dependent on the merchants. Their market was fairly
secure, and their prices for tinplate varied less than market prices.
Production was less a matter of speculation and more in response
to demand directly from customers abroad and in fulfilment of
contract. Consequently, those makers who benefited least by
dumping apjiear often to h.ave suffered most from the resultant
fall in prices of tinplates.

Although prices to tinplate merchants w'ere reduc(*.d, consumers
who purchased from them did not always, if often, benefit ; for
just as some large consumers in foreign countries made contracts
with manufacturers without the intervention of merchants, so,
too, did other consumers make contracts with merchants; in
other w^ords, while the tinj)late market is highly organised hs
between manufacturers and merchants, it is not so higlily
developed as betw^een merchants and consumers, and wide varia-
tions in prices charged to consumers may exist.

Moreover, even if prices to consumers liad been proj)ortiona1(‘ly
reduced, the reaction on trade would have been extremely slight ;
for the long period demand for tinplate (as distinct from market
demand) is highly inelastic within fairly wide limits of price.
Thus it seems absurd to argue, as many have done, that the
prosperity of the tini>late trade in recent years is largely due to
importations of bar at low prices. It is undoubtedly due to the
increased use of tinned food, &c., and the effect of slight variations

^ Not until the summer of 1911 did American shippers accept less than a
full cargo of bars.

190 THE ECONOMIC JOURNAL [JUNE

in the prices of tinplates upon the prices of and demand for tinned
goods is negligible.

The destruction of the bar monopoly was undoubtedly an
adyantage to tinj^late manufacturers, but an advantage purchased
at considerable cost. Dumping occurred at irregular intervals, and
the quantities imported varied considerably ; consequently, violent
and unforeseen fluctuations in prices took place, market conditions
became more unstable, and contracting for future delivery more
difficult and risky.

(3) XJndoubtedly the most important effect of dumping has
been to hasten the j^rocess of integration in the steel and tinplate
industry. Until about six years ago the two stages of manufac-
ture formed quite distinct businesses, but, now the production of
Siemens l)ar and tlie manufacture of tinplate constitute practically
one industry.

S])ace will only^ permit a short statement of the manner in
which the change has been produced.

In 1905 the Americans exported considerable qixantities of
Siemens bar to this country, and Welsh ju-ices were extremely
low. But at the end of the year dumping practically cc'-ased, and
the market improved. A few months later the Sieiiiens Bar
Associjition was formed for the purpose of raising and regulating
Welsh prices ; and the conditions of manufacture and trading
w^ere so favourable that its efl’orts ver(‘ largely successful. There
are but few makers, and tlie number is not likely to be increased
very considerably. For steel production involves a considerable
expenditure of (capital; the producing ca])acity per unit is large
relatively to the total demand, and a few factories can produce all
the bars required.

Ijate in 1907, however, foreign bars once more appeared on
the Welsh Jiiarkei, and more than one local steel manufacturer
was in a ]>osition of some difficulty. The easiest way out of this
difficulty was to secure ])referential treatjneiit and a market for
the bar by acujuirmg financial interests in tinidate factories.

This policy has now been carried out everywhere, and to-day
there are practically no Siemens bar manufacturers who are not
also financially interested in tinplate works, and very few
Siemens tin])late rnaktirs who are not shareholders in steel manu-
facturing companies.* But it should be observed that this process

1 Tho movement alill continues, but a few tinplate makers remain independent.
They now complain that during brisk period.s they are left out in the cold and
cannot obtain stool. Bar makers naturally supply those works in which they are
fmanoially interested before they sell to the outside manufacturer. The importance
of a steady supply of steel of guaranteed quality made the average tinplate maker
ready to join the movement towards amalgamation.

1913]

DUMPINa AND THE TINPLATE INDUSTBY

191

of integration would have gone on — at a slower rate, perhaps —
even if no dumping had taken place after 1906. It was the inevit-
able consequence of the formation of the Bar Association. For
although the latter controlled prices, it made no attempt to control
the output. While the steel manufacturer could not sell in the
open market at a price below that fixed by the association, there
was nothing to prevent him from erecting additional melting
furnaces and in other ways increasing the producing capacity of
the factory. And the high prices fixed by agreenuuit naturally
induced him to do this, and to guarantee a market for the whole
of his output by purchasing or (combining wu'th a sufficient number
of tinplate firms. In the tinplate industry, although the pros-
pective advantages were considerable, the (‘.onditions were not
favourable to the control of prices by (‘ombined action. Not only
w^ere there too many firms already in existence, but the cost of
erecting new factories was so small tliat new comi)etitor6 could
easily enter the trade and sell plates at lower f)rices. 3t is (W'ident,
then, that recent dumping, by early creating a condition of things
which would inevitably have followed, has hasieiu'd lh(^. process of
integration.

The situation to-day ]>resents features of interest. The Bar
Association apjiears to be a successful experiment ; prices ai*e fixed
by agreement and cornjietition seems to have been eliminated.
But in reality steel manufacturers are compc'tiTig against each
other in the next stage. Ijarge firms controlling both stages wall
often sell tinplates watbout profit, and if necessary erect neAv
tinplate mills, in order to secure a market for the steel at
association prices. 1.’he trade has increased so steadily during the
past half-dozen years that this fact has escaped general notice,
but wathin the next few years it wall probably b('-come mon'.
evident to the outside public.^

* This prodictioTi, which was made when the pap*'i- was wrdljon in Sopteinbor, 1912,
has already come tmc. In the sumiiior of la.sfc year demand waK m excess of supply
and prices were extreincly hi^h. but at the tmio of writing tliis note (April, 1913),
between 15 and 20 per cent, of the tinplate niiDs arc idle. Altljough the depression
is likely to be of short duration the cau.sos aro worth mentioning, Sonio operate on
the side of supply, the remainder on the side of demand.

In the first place the producing capacity has been rapidly increased during the
past two years, (1) As already hinted in the text, a large numbi r of new mills have
been erected since the proce.^j.s ot integration bocauie well marked. This is un-
doubtedly ttio main cause of the depresbion. (2» The efficiency of some of the now
mills is greater than that of tiie old ones. The standard size of plate is 14." x 20".
At first 14 inch rolls were employed, and plates wore rolled “single width " ; then
28 inch rolls were introduced, plates wore rolled “ double width " and cut in two,
so that the output of tlie mill was doubled with little, if any, increased expenditure
of labour. Some of the rolls in the newest mills are 42 inches long, and plates aro
rolled in three widths. (3) Improvements in the driving machinery have increased

192 THB BOONOMIO JOTJBKAL [JUNE

The question naturally suggests itself : how far will the move-
ment towards monopoly or combined action go ? But a few years
ago a well-known writer argued that a price agreement in the tin-
plate trade was impossible, as there were too many firms in the

tho normal output of the olclbr mills by roduciug tho number of forced stoppages.
It is thus obvious that the ])roducing capacity has been increased more than
proportionately to the nunibei’ of new mills erected.

In tlic second place tho demand for tinplate has fallen, mainly because the
Balkan War has caused tlie Kouinainan and other markets in the near oast to be
temporarily clo.sed. But interest is now mainly directed towards the American
markots. About two years ago the rebate orders from tho United States, and
shortly afterwards tho Cnnadian ord(‘rs, wore lost to Welsh manufacturers. At that
time they wore less remunerative than those which were accepted from other
customers, and the hitter were suHieient to keep all the mills fully employed. In
tho United States, on the other hand, both the steel and tinplate trades wore
suffering from overproduction. Formerly the “surplus” bars were dumped into
tills country, but recently they have been converted into tinplates for sale at home
and ill Canada. The policy of dumping tinplates into Canada and competing for
tiie rebate orders was encouraged by the workmen, wlio accepted large reductions in
wages when working such ordeis. It is now reported that part of the rebate order
for this summer has boon placed m Wales, so that it appears likely that a portion,
at least, of the Ainenoan trade will return.

While it is impossible to compare the costs of i)i*oduotiou in the two countries,
it is probably true to say that the manufacture of tinplate involves a smaller net
oxpoudituro of human energy in America than in Wales. On tho other hand, since
the measures of value ditter materially tlic money cost is considerably higher. The
facts already given suggest tliat American manufacturers can only compote
successfully when prices arc abnormally high, and even tlsoii, it may bo, only when
prime costs arc reckoned for pig iron and stool bar.

Those considerations are relevant to a di.scussion of the probable ellocts of the
proposed reducti«m in the United States tariff. If we cannot recapture tlie rebate
order it is diflicult to see liow we can hope to benefit immediately from a reduced
tariff. Until the producing capacity can bo adjusted to tho new conditions tho
Americans will continue k) sup]»ly tinplate intended for homo consumption, even
assuming the present high duty to be necessary to profitable business. Moreover, if
a now and lownr scale ot dutic.s i*. adopted, of which the tinplate tariff is only one, a
measure of value more like our own will emerge, the general level of prices will
fall ; and if the statement that tinplate manufacture involves a smaller net
expenditure of hninan energy is true the ultimate effect of the proposed tariff
changes will be unfavourable to tho Welsh industry. It is undoubtedly true to say
that if the lliiiled States iiad adopted a Free Trade policy when tho Wilson Act was
passed, the Welsh tinplate industry W'ould not have recovered so completely
from the blow given it by the IMcKinley Act.

Some WTiteis attribute the present depression in South Wales to the ooal strike
of last year. Contraisting for future delivery is uudouhtedly made more difficult by
strikes and fear of strikes, but orders are seldom lost unless there are competing
commodities produced outside the strike area, or a competing branch of the same
industry in a foreign country. NeitJier of these conditions obtains in the case
of tinplate, so that tho coal strike can scarcely bo a contributory cause of the
depression. It is extremely likely that demand will soon be greater than over
before, and when prosperity returns it will not be surprising to find a serious
attempt being made to control prices by combined action on tho part of the
manufacturer-!. 'I’he Siemens Bar Association may easily become a bar and tinplate
association.

1913] DUMPING AND THE tPINPLATB INDU8TBY 193

trade* But to-day we find a comparatively small number of large
busineBS units, each of them exercising partial or complete control
over a bar mill and one, two, or more tinplate factories. Between
these large business units keen competition j)revai]s at present,
and keener will prevail in the future ; and without the operation
of certain counteracting forces now at work, some such combina-
tion as exists to-day in Germany and America would probably be
formed.

The conclusion we arrive at is that dumping provided a strong
incentive to the formation of the Siemens Bar Association,
although the conditions of success of the association’s policy were
largely independent of it. In this way it hastened the process of
vertical integration, and helped to change the organisation of the
two industries. The question of the control of tinplate prices,
which quite recently was regarded as outside the range of business
politics, has now be<*ome a practical one, and is likely to receive
consideration in the near future.

.1. H. JONKS

THE INCIDENCE OF INCREMENT DUTIES.

In Iiis classic treat mont of the question of unearned incre-
ment, Mill rightly pointed out that the present market price of
land covers the discounted worth of future accretions to its value.
It follows, as a corollary, that any tax upon those accretions when
realised will also be anticipated and discounted, reducing the
present market value. The view that the whole burden of an
increment tax must be iqum present holders has recently received
the endorsement of Mr. C. F. Bickerdike in this Journal,^ after
he had dealt with the considerations leading away from that con-
clusion. A princi])le so fundamental is worthy of close examina-
tion in relation to ]>ractical schemes, in view of the future of this
new branch of taxation.

The view of tlie writer was expressed in this Journal - in the
following terms: ‘‘Taking the term ‘market-judgment’ to be
the reasonable consensus of opinion as to the future prospects of
a given site, it may be said that everything as far as that market-
judgment can see, up to its ‘ time horizon,’ as we may call it , has
an influence on present valuers. Beyond this horizon nothing can
be judged, all chances of further change in value are even. (If
they are not even, let a chance of further improvement pre-
ponderate, say as 3 to 2. Then, obviously, this preponderance
must have an influence on present value, and the point where 3
to 2 is still seen is not the horizon.) In a sense, we have here the
difference between investment and speculation or gambling. If
the market-judgment (as an averaged risk) is borne out, the
future value is the same as the present, with a difference for
interest only. Uie value at the horizon, discounted, is present
value. Now a tax allowing for interest could not confiscate
present investment value. The interest must be reckoned on the
whole value of an unused site, but for a used site the capital value
of the present income must be deducted from the whole value,

'■* March, 1911.

1 March, 1912.

a9i3]

THE INCIDENCE OE INCBEMENT DUTIES

195

and interest reckoned on the unproductive margin only. The 10
per cent, allowance represents about two and a half years for an
unused site, but may be twenty years on a well-used site with
some future prospects. The question of confiscation is jointly
one of the distance of the horizon and the amount of the unpro-
ductive margin.’*

Professor Pigou,^ in his letters to The Twies, pointed out that
an estate yielding no income, but expected to be worth £350
per annum in 1934, or a capital sum of £11,600, would be valued
in 1914 at £6,400, reckoning interest at 3 ]>er cent., and a tax on
the “increment” of £5,200 is not in any sense a windfall tax,
“but a direct impost on the present owner.” In the majority of
cases the postulate that there is no income at all is, of course,
incorrect — market value comprises the capital valut' of present
income and that of future expectations. Siq^posing any fictitious
currency increment to have boon eiiininated, Professor Pigou
says : —

“It is possible to separate the windfall element in the real
increment in the following manner : If a piece of land in 191 1 has
a total value (x + y), made up of a value a* due to its present
(agricultural or other) use, and a value ij due to exped-ations of
building rents after 1934, there should, ini crest being reckoned
at 3 per cent., be a non-windfall increment in the value of the
land by the year 1929 equal to 56 per cent, of y. If interest is
reckoned at 4 per cent, this non-w indfall increment should anunint
to 82 per cent. In order, therefore, that increment tax may be
confined to windfalls, it ought only to be levied on increments
which, at the end of fifteen years, exceed, say, 70 per (‘onl. , not
of the total original site value, but of this total original value
minus the part of it that w^as due to the then (agricultural or
other) use of the land. For periods of greater or less lengi-h
than fifteen years similar calculations could, of course, easily be
worked out.”

It appears, so far then, that a tax could be designed to tax
the windfall element only, to avoid investment interest, and there-
fore to %ftye no effect w^hatever upon present vahu^s. Ihit Mr.
Bickerdik?^3 not in agreement. His own words must be quoted,
in order that his meaning may not be disiortc'd. “Anyone wlio
has paid that present value needs the increment to enable him to
earn interest. To tax the increment simply knocks so much off
the present value.

“But do w'e really get out of the difficulty even if we allow

^ Vide “The Policy of Land Taxation."

196

TOE ECONOMIC JOURNAL

[JUNE

for intereet? Do we get, in theory at least, a tax on ‘ unearned
increment’ pure and simple? Is it not like a tax on winnings
in a lottery, imposed after the tickets have been bought? Land
is bought with the knowledge that its future value is problematic.
The purchaser gives a price for the probability. If you announce
that all the chances that turn out well will be taxed, is it not
exactly the same thing as knocking something directly off the
present value of all the chances?

'*Do we not then arrive at this conclusion, that the increment
value tax is no different, as regards the question of incidence and
ot equity, from a simple tax on existing land values, and that it
has this peculiar feature which differentiates it from all other
taxes in force, excepting the old land tax, that the true incidence
of the whole burden, present and future, is on a limited number
of existing owners of land?^'

Mr. Bickerdike rightly concludes that Mill, and others wdio
have made no reference io interest, have failed to see that part of
present value must be confiscated, and his criticism of the Pinglish
duty is so far just, but in so far as his criticism goes beyond the
omission of interest, and he has in mind the omission also to deal
with the “lottery ticket,” we think his remarks require careful
examination. Professor l^igon deals with the same |K)int much
more cautiously when he says : —

“In some cases an increment which is not definitely expected
ncwertheless enters in some measure into present value, and is,
therefore, not true windfall. I may, for instance, have a piece of
land which is expected to yield for a long while ^300 a year, but
in regard to which it is recognised vaguely that either a rise or a
fall may take jdace. This land — with interest at 3 per cent. —
will have a (-apital value of fl0,00(), and it, therefore, seems at
first sight that the jiossibility of its rising in value is not being
discounted. In reality, however, this possibility does enter into
present value, acting there as a counter-weight to the possibility
of a fall. 1’'he measure of influence which this possibility,
reckoned over the ensuing fifteen years, exercises upon present
value is given by the sum for which the right to all increment
of this class — I am not, of course, now referring to the anticipated
increment already discussed — accruing during the said fifteen
years could be sold. The matter is one upon which the opinion
of land-agents and others might usefully be taken. I feel some
confidence, however, that the sum obtainable would in general be
a very small fraction of the capital value of the land. If this
conjecture is right, these increments, when they accrue, are

1913] • lae tNOIDBNCa.;(jF INdiiBMENT DUTIES , 197

predominantly, though not entirely, tyindfalls; and the passing
of a law fbr their taxation would not strike present owners to any
substantial extent.”

Probably Mr. Bickerdike would not wish to insist greatly on
the practical value of his “lottery ticket,” but since he goes so
far, and the point is really of considerable im})ortance, it is worth
while to examine it more closely. We fe'el somewdiat in the
position of the Irishman who had “never seen the kettle, and if lie
had it was lent him, and if it was lent he returned it, and if he
returned it it was all right when he did so, and if it was broke
when he returned it, well then it was broke when he first had it.”
For vre doubt the real existence of the lottery ticket, but if it.
exists it is not much good, and if it is, well it is not really a
lottery, and no one hns read what is on the ticket.

In what sense is the value of land jnoblematie, and in what
sense does the purchaser give a price for the pr(fl)ability? Taking,
for simplicity, a site that yields no {)reseni inconui, we may
conceive that it will be worth .i'‘2,t)()() at the ex])iration of a certain
length of time, and therefore 1‘1 ,50U Jiow, the present value,
because : —

{a) It will certamly bo worth that, on capitalised income
yield, and the prosi>ect8 of plus or minus are nil, or

(b) it may range between .1:1, 900 and l'‘J,100 at that lime
on income yield (we assume for the moment that what Pro-
fessor Pigou calls the “counterweight” is equal to the prospect
of deficiency, and that value is midicaij between the extrejnes,
though this is not necessarily tru(i), or

Now, on Mr. Bickerdike’s principle, (a) would be covered by
the interest allowance, and there is no depression of present price' ;
(b) has a practical range (on tlie assumption of a 20 peu’ cc'iit.
tax, above interest allow^ance) from £1,900 to £2,080, mean
£1,990, present value £1,497 10.<?. ; (c) has a range £1,500 to
£2,400, mean £1,950, present value £1,402 10,9. Thus, the
effect on present value is proportioned directly to the pure
gambling element, and, inversely, as the stable business element,
in the valuation, and if it has some effect on present values in a
f^w cases it is not wholly to be deplored. ^

gambling results, there would be little r(‘asoU''^Ti equity, why it
should not apply to transactions already entered upon. But in
land it is only a small proportion that are of the extreme gambling
type, and we may get an unbroken series up to the other extreme

No. 00.~VOJi. XXTTT. 1 ?

198 THB BOONOMid JOtJRNAti [jUNE

xy^iere the purely commercial unspeculative result rules, and there
is absolutely no lottery element. Only a small proportion of
cases are of the highly fluctuating or lottery kind, and also only
a small proportion of dealers in proj^erty care anything at all for
the lottery element, and give anything for it. It may be said
that one ]:>erson who does, out of a dozen bidders, will command
the sale ; bul^ we would venture to say that even that one is often
absent, and it is not those who esteem the lottery ticket who
generally nil(‘ the pric(‘.s.

Then, again, there is the mistaken assumption that the
relation between lottery iicket values and lottery prizes is a simple
mathoHalical one, and that a ticket is “worth the prize divided
by the chances to the average person. The relation is far n:ore of
a psychological character. Is it to be understood that one grand
prize of £1 ,000 for a thousand tickets would give the same ticket-
value as five hundred £2 prizes? Indeed, no; and the i)oint of
maximum appeal to the gambling interest is probably between
these two, but generally it may be said that a little docked off
the big jH’ize would not affect the value nearly as much as a
reduction of the number of chances. So a tax that “docks”
something from the prizes will not have such serious results as
one which procetuls to take the whole of every fifth prize away.
The “demand ” side is little influenced by the exact size of prizes,
but greatly by Ihe chances. Our assumed interest-free increment
duty th(m will not have an exact mat hematically-equi valent effect
on values, especially wdien the j)rize is discounted over a long
period and we are thinking only of present values.

But it may be said that w'c have assumed that the lottery
elemcmt is ju-esent during the currency of the accumulating
interest period, whereas it should be taken as coming into exist-
ence afler tlu; realisation of this. That is, w^e should take the
value to Be £2,000 at maturity (£1,500 now), plus a lottery ticket
to be given us then for what will happen in the more distant
future. We have, as (a) above, what represents a certainty (as a
market judgment) plus a problematical after-possibility. This
chance element may be (1) either a narrow or wide range of
fluctuation in value, say down to £1,000 (decrement), up to
£3,000 (further increment), as given in (6) and (c) above, or (2)
one chance, in a number, of a good prize. Dealing first with (2),
the above remarks apply with greater force owing to the distance
of time. We get a position, in most cases (in evaluating the
present value of a lottery ticket to be awarded at some distant
period, of wiiich the prize will be payable at a period still more,

1913] THR INCIDBNOR OP INORRMRN1? lJUTIRS 199

distant) analogous to the value of a reversion which, lying beyond
a nnmuer of years having a reasonable relation to the span of
human life, fails to have any effect upon present values.

But in the case of (1), which may be said to be the typical
one, and is probably what Mr. Bickerdike has in mind, where
problematical future values have to be dealt with, we must say
more. In this case, we can see our way to a certain definite
result with reasonable certainty, but after that there w’^ill be a
fluctuation up or do^vn. ^rhe uj) and down are in ecpiipoise; a
tax on the ‘‘up,** and no allowance for the “dowm,” will make
the point of equijxuse lower, and thus affect piesent value — such
is substantially ibe argumejil. But a cnicia* (|uc.sti('u has beeji
omitted. Is the system a personal one, dealing only with the
position of the owmer ; oris it impersonal, dealing with the site?
The English system is the latter. On an impersonal system,
dealing with the site only, when the site has risen to i*2,()()() as
expected (and if interest is alUwed, no leal chargeable increment
is found), it is fnmhed for ever for 'fc‘2,()00. What is the signi-
ficance of this? If it sinks in income value thereafter to, say,
^1,700, a purchaser knows that it is trankod at £‘2, ()()(), and he
has a JU300 rise absolutely free of tax possibl(3. So this site, in
competition with other sites of equal income values, which have
never been so franked up to an advanced point beyond thc^
existing income value, has a substantial advantage. With the
lair postulate that taking the generations through, and ignoring
decadal fluctuation, sites will have a tendency to increase, this
site will be bought with a subsequent advance and recovery
actually in view’, and the question of a tax-free increment acting
as a differential advantage will pi^vent the value falling to the
point it would have reached hut for the tax already borne. ^ If
other sites, having no such advaiitage as the “shield” provided
by the over-sangume estimate previously ])laced by the market-
judgment upon the site in question, would have been worth d[:l,70()
in the abWmce of a tax, and if we assume that the existence of the
tax dejiresses their value below that figuie, the shielded site does
not share the disability at this point, 'llie fluctuation range wdll
not then be altered from, say, f2,30()-iJl,700 to i£2,250-
5£1,G50 by the existence of a tax, but to €2,250~il,700, i.«.,
£1,975, or half the amount of the tax below the old mean. In
short, the equipoise is reduced by half the tax, because, althougli

Analogous to the effect of the Laud Tax exemptions and abatements on market
values. Vide “Land Valuation and Rating Reform," by the present writer,
Economic Joubnal, 1911 .

P 2

200

THE ECONOMIC JOtTENAL

[JUNE

aTjy, further increment will be taxable arid reduce the prize, if
there is a decrement, tax will be held up as paid in advance for a
subaequenl recovery, and Ihe fact of freedom for this tax will be
uiscounted in the decrenumt. If we revert to the lottery figure,
it may be said that \\hile each holder is to be given, on the
declaration of the result, a ticket in a subsequent lottery, those
tickets given to tlie failures sliall ho favoured by carrying the"
right to prizes of the old magnitude, whereas the tickets given
to the successful continue to bear title only .to taxed prizes.^

But it is one thing to have lialved the maximum burden which
is to b(' foreseen oi* (lis(‘oimted, and another to consider the whole
practical effect of the reduction. It is one thing to observe free
action in a vacuum, but another to modify it by the introduction
of normal conditions. In tlic catallactic S2)here we have con-
sidered, the change in size doubtless does not affect the probability
of shifting in the slightest, but in real life we know tliat the
smaller the tax the less tendency it has to shift, and if resistances
are constant the probability of shifting will irierease ^U'Ogressively
with the burd(‘n. At the 2 ^oint of emergence into practical possi-
bility, a change directly as the square seems a not improbable
assumption. It is not too much to say that in halving the burden
— distant and not too tangilde in this ease — the j^robability is so
diminished that the net resultant burden shiftable in the aggre-
gate of the cases is reduced to one quarter. But this is viewing
the tax as of an ordinary kind, prospectively considered. When
we remember that it is merely an alteration in lottery values,
and that its aj^peal is not along actuarial but psychological lines,
and along those lines is in the direction of minimum effects, the
actual [U'obabilit} ol shifting back is still further reduced. Home
of the considerations urged l)y Professor Pigou in relation to

1 While it may not he primd facie x>laubiblo that the lower limit can be actually
improved i)y Uio imposition of such a tax (i.e., that it may ho above {£1,700 in the
example tak(3n), it is conceivable Uiat such may be the case if the conditions urged
by some writers as likely to ensue upon the introduction of the tax are actually
found to exist. They contend that ownership will be perpetuated, and owners will
prefer to remain in possession and receive the income, rather than become, by
capital realisation of that income, subject to the burden. The contention is dealt
with later, but in so far as it may be correct, it is an interesting speculation to
consider t)ic effect in a limited market with few buyers and sellers. The owners of
“unshielded” sites, worth 1*1, '<00, would not wintt;, to sell, unless the price rose
enough to reimburse them, and there would hi*, tor them, a zone of reluctance, say,
to {£1,760. A single “ shielded” site, in its downward search for a buyer, need not
drop to £1,700, but only to just within this zone, to be carried off, Hutch auction
fashion, say at £1,740, by the most urgent bidder. The owner having no cause to
share the reluctance of the others, can, in short, profit by it. In such an event, of
course, the point of oquipoiso after the imposition of the tax is closer than ever to
th^ original figure.

1913] ras INCIDENCE OF INOEEMENT DUTIES 201

postponed” texation m general are also m point here, and to
the ^ame end.^

Here we may profitably con&idei the eftect of such a device
as the “substituted she value the British system, where a
purchase figuie within the tx^enty veais prioi to 1909 which is
higher than the 1909 valuations may be substituted as the datum
line. What is the position when tv^o sites of equal value (say
£1,000 at 1909) are in competition in the maiket, one of uhich
cost, say, £2,000 fifteen yeais ago, uhile the olhei had no such
history? If both rise in value to £1,500, the seJlc'i of tlie fust
gets his £500 “profit” m full, wheieas the othei vmH secMiie, aftei
payment of the tax, only £120 The first, if buyers ue few, can
afford to sell at £1,470 and still do a great deal bettei than tlie
second at £1,500 The piovision acts as a handicap in fa\ou)
of holders of the former and ma\ ha\e a teii(hn(\ to lowci the
market

On the whole it may be said that, “c\en in theon,” Mi
Ihckeidike s doctnne of unncisal incidence on piesont owneis
needs such seveie qualification as to destio} its \alu( as .i \ali(l
ciiticisrn of an inic lest-aliowing inciemcnt tax proposal Vnd
m practice, too, it has \ei\ little somblaiue ol liutli Tlic'
statement that the true incidence, pusenl and intuu of a icsil
windfall tax is on a iiimted uumbei of existing owueis of land,
thioiigh the lotteiy pimciple, is siiiulai in dc'giee, it not in kind

' Wealth and Welfare, p 376

* The Fmauoe (1909 10) Act, 1910, pioAidos [su 3 (0)1 foi a 10 pci cont increa «
m site value to bo tax free on each occasion wbon llie inriuiunt ^aluG i being
calculated, with the slight reservation that ni iiij hvt \raTs the amount so allowed
fehall not exceed 25 per cent of tin sit© \alut Soc 2(1) confines taxation to the
incicmont in site \alue bee 1 en mm rates tlie occasions ol taxation to me hide
bale, lease over fourteen ytais, am death See 2(3)pu)Mdcs foi a substitution (for
the '‘original value of 1009) of an} greatei sum paid during the pieoeding twenty
years, to avoid taxation in the case of a recover} from depicsRion since that purchase,
and see 3 (1), etc , for taxation to bo confined to progicssnc increases and not to
apply to recoveries from intervening decicnicuts

The German Imperial Incioment Tax Law of Lobiuai}, 1913, pi o\ ides m soc 1
for taxation of increment m the value of proport} , m stc 7 foi “death’ to

be excluded fiom the occasions for mcriment in soc 1(> for certain allowances of
interest upon the purchase puce, from 1 poi cent to 2^ pu cent aciordmg to
circumstances Sec 17 makes the tax retrospective on incrcmentj from the value
rn 1886, or from any higher purchase price Sec 28 establishes the tsx graduation
from 10 per cent on increment not cxoccdirg 10 per ci nt , up to 80 per cent on an
increment of 290 per cent , this tax being reducible b} 1 per rent of its amount (not j
rate) for every year of the increment peiiod, thus treating shoitpcuod speculative
rises most heavily These points suffice for the puiposcs of tlm aiticlo — a further
detailed comparison of the two complex systems is given by tlie writer m the Local
Government Beview^ December, 1912,

202 the economic JOUBNAL [JUNE

to the statement that a crooked nose three generations hence
exists to-day in the great-grandmaternal ovum.

Professor Davenport, and other American writers, abuse the
‘Xapitalisation or “ Amortisation ” doctrine by applying it too
sweepingly. ‘‘With every increasing assurance that the new tax
program will be adopted there must concurrently be taking place
a fall in the market values of the lands. When, finally, the law
has been enacted, the values of lands wdll have fallen in a degree
to express the present worth of the expected future increases in
the tax burden.* **^ When Professor Davenport, speaking actually
of the Elnglish tax, goes on : “Such lands as are thereafter sold
will exhibit in their sale prices this prospective diminution of
income,^' there seems to bo some confusion in the language.
“The real taxpayer is, therefore, the present vendor. If the
new proprietors are ever called upon to feel any burden, it must
be solely by the fact that they have mistakenly appraised the
degree of menace. “ Professor Johnson - says also that : “It is
true that the burden of the tax will fall on the present owners ;
. . . the decline in selling value will he the sum of the present
values of all the future increment taxes, so far as they arc
anticipated,^^ We italicise his last woids, because they govern the
whole question. E^ortunately, the writer goes on, “the sum of
an infinite series may itself be <(uite small. Moreover, the fact
that land owners and land buyers may not expect to appropriate
all the increase in value is no reason why they will not appropriate
all the law allows, l^nghty per cent, of a loaf is better than no
bread. “ These statements about the immediate incidence of all
future burdens are extravagant indeed when we remember that
the majority of land values comprise, in the greater jiart,
capitalised present income, with perhaps a small margin for real
expectation (and occasionally a little payment for a lottery
element), so that a 10 })er cent, tillowance is more than enough
to prevent the throwing back of the tax on this marginal element
in most cases, leaving the genuine windfall element to bear its
own tax when it arises.

But Professor Davenport’s remarks about the effect of the
burden in inducing owners to retain ownership and receive rents,
instead of selling and paying a tax, are very much to the point.®
He urges that the effect will be to Ifcsen transfers, and the tax
will therefore tend to fall more and more upon occasions for duty

* Quarterly Journal of Econmnics^ Vol, xxiv., p. 289. Ibid.y p. 761.

» Since the tax is levied only on sale, grant of long lease, or on death, in England,
wliile in Ghjrmany “ death" is omitted from the occasions for liability,

1918] THB IKCIBBUCB IBOBEMBNT, DUTIES , 203

at death. Thus the periods of accrual will become longer, and
occasions fewer/* ^ But under the British system, with the 10
per cent, allowance every time, and still more under the German,
with the progressive rates, there is a strong countervailing ten-
dency that most writers omit to notice.^ If “occasions** tend to
be few the Revenue will be the gainer. Again, too, there is
always a demand for outright purchase, and if owners hold up
so that properties “trickle** out into the market, prices will
harden up, and even valuations at death will have a tendency to
be based on the evidence of the higher and fewer sale prices,
which at once set up a counter attraction to sell. As Professor
Johnson has said, Professor Davenport’s theory — “that the per-
petuity of the landed gentry has been guaranteed ** — needs severe
qualification. Brunhuber rightly says that an increment tax
“stands in the way of any artificial rise in values, “ and “a
substantial and rapidly progressive tax of this, sort tends to keep
down prices.**^ It has been argued, with some show of reason,
that a periodic levy, say every ten years (in a direct form), would
avoid the question of special retention.

Mr. J. A. Hobson’s comment upon this “shifting-back**
question is disappointing. He holds that the fact of having invest-
ment in land having proceeded on an equality with other forms of
investment for so long need not preclude the special taxation of
future increments, “for if it be contended that part or the tchole of
such future rises of value has already been anticipated, . . . and
that it would be unjust to take from existing owners any part of
the prospective values, . . . w^e can only reply tliat this cannot
be held to be a proper interpretation of the conditions under which
reasonable men have recently made contracts for the sale or
annual leasing of land.*’^ He explains that it is not “j>roper,’*
because the proposal to raise public revenue from increments in
land value has figured so prominently in practical politics of all
progressive parties, that it may “fairly be presumed that the
probability of such special taxation has been taken into account
in recent negotiations for sale or leasing. ... If I h?iyc paid
£900 when I should have paid £1 ,000 but for the probabifity that
special taxation would shortly be placed upon it, I can 'have no

' Vide “ Unearned Increment Taxation in Britain and Germany — a Comparison,*’
—in the Local Government Review, December, 1912.

2 Vide ** Ueber die Reform der Grundsteuern in Grossbritannien und Irland,*’
in Conrad^s JahrhUcher fur Naiionalokonoinie und Statistik, July, 1912, by the
present writer.

3 Quarterly Journal of Economics, Vol, xx., p. 103.

* The Industrial System, p. 226,

204 THE ECOKO«lj^ JOUBNAL [jvm

groUBid for cdiiiplaint if this probability is converted into
aotnality.” He disposes of the shifting-back difiiculty by shifting
it back further ! You have only to talk about a tax for a time
before it is imposed to deprive it of all sting when it comes into
force! And if there is any injustice, it is not the doers and
legislators, but the talkers and propagandists who work it. Mr.
Hobson does not deal with any allowance for interest as a method
of reducing the difficulty, so that the full force of a tax on the
British method has to be covered by his “talk about it and
smother it up” doctrine of incidence, and at the General Election
of 1906 the burden of the tax of 1909-10 on future increment was
borne once and for all I Throughout this paper we are not really
concerned with the effects of apprehension uix)n market values,
which should not b(‘ confused with the mathematical disposal of
a known burden, but only with the possibility in theory ** and
practice of shifting hack a tax u|X)n true increment or windfall.

We have assumed up to this i>oint that an adequate allowance
for interest is being made, and that otherwise the incidence of
the tax must be f)artly on ))resont values. But this question of
interest as a pro])er and fair allowaiu^e must not be dismissed too
lightly. Like every other feature of an increment tax, il must
be studied in relation to the otJur clcnirnts of existing taxation,

“The proposition to exempt a (vTtain kSiuh for interest brings
in at once important features, nearly alvays overlooked. The
very sum exemjded is an accumulated interest which will thus
have borne no tax at all, income or otherwis'=^, and real property
is virtually the only form of cajntal (not dependent upon the
collector’s instinct) lu Mhich a man can let his interest accumu-
late without bearing tax thereon annually. ... A man who had
bought a [)roi)erty for -CLOOG, and sold it for ^1,500, has hitherto
escaped income tax, because it was a “capital” increase; now
when it is said : “You have a capital increase suitable for taxa-
tion,” if he j)Ieads that it is not cajutal, but merely interest
(deferred), he is back into the arms of the income tax. The
problem of scheming a tax on future social values without affect-
ing ar??/ present values a1 all (as distinct from existing CQjitracts) is
well-nigh insoluble, because there must be brought in a kind of
substitute for an income tax on an interest previously free, and
that can hardly be done without affecting the present capital
value of tlu* somce yielding that interest.”^ This objection to
the interest allowance has never been answ^ered. Of course,

1 Vtdc Economic Jouhnai., March, 1911, ** Land Valuation and Rating Reform
by the prebent writer,

1918] THE INCIDENCE OP INCBEMBNT DUTIES 205

directly we cease to tax or rate a property on its present income
value (and, in the ease of a vacant site, that is nil), and begin
to tax on a percentage of the capital value, the objection fails.
This class of accumulated interest has too long been free from
all taxation, and if it is now reached by a non-interest increment
system, there can be no real hardship except possibly in the rate,
4^. in the £ instead of Is. ^2d. income tax. But even then, the
escape from rates, so far as they are levied on a faculty prin-
ciple, serves to show that the new taxation on this class of income
is not excessive. Any burden falling upon the present owners
through this system should not be put to the credit of a true
increment tax, but must be regarded as due to the rectification
of an anomaly in the income-tax system, and as jnst similar to
what would have taken fdaco had this favour(‘d form of j)roj[)(‘rty
been brought within the income-tax net by legislation.

8o we reach the conclusion that an incriMiieni duly on the
British model comprises Um) el(‘nients : one, a legitimate exten-'*
sion of the incom(‘ tax to a class of annual interest hitherto free,
and the other a true tax upon “windtalls.” ^Phe first, in so far
as it is not covered by the 10 per ceni . alloirancc (and sucIj cases
will be mainly restricted to unused sites), is sliilt('d baek, as the
rectification of a diflerentuil fcuour, to prc'seni holders; and tlie
second, the true inclement tax. is hardlv “shiftable ” at all.

J. (\ Stamp

CONTRIBUTIONS TO THE THEORY OF RAILWAY

RATES.— IV.i

Digression on Professor Pigou’s Theories.

Resuming niy attempt to construct an abstract theory of
railway economics, I find the ground j>reoccupied. My incipient
constructions are dojuinated by a new and imposing edifice which
has arisen in their neighbourhood. The builder thereof is one
who lays his foundations very deep ; and it may well happen that
in doing so he may have caused the ground io give w^ay from
under a neighbouring structure. It is possible also that his
building may afford sup[X)rt to that of a neighbour after the
manner of a buttress. These fears and hopes are excited by the
cliapters on monopoly and railway rates in Professor Pigou’s
Wealth and W cl fare. I have already^ pointed out the importance
of this work as n. whole. I think it necessary now to consider in
greater detail those parts of the work which bear on subjects
handled in the preceding sections of the present study and in the
earlier paper ® on which those sections are partly based. I follow
an order of topics suggested by the arrangement of th('. said
sections.

Limits of State Intervention . — There occurs first the question,
What are the limits of a study wdiich purports to lead by v>^ay of
the theory of monopoly value up to the regulation of railways
by Government.^ ] had defined the objects of the study as “public
works characterised by monopoly of such a kind as to justify the
intervention of the State.” What that kind might be I suggested
by reference to M. Colson, who distinguishes those works> which
have need of land in so special a degree as to call for the inter-

1 See Economkj Journal for September and December, 1911, and June, 1912.

^ Economic Journal, Vol. xiii., p. 62.

® “Applications of Probabilities to Economics,’’ Economic Journal, June and
September, 1910.

* According to the plan proposed at the outset of this study, Economic Journal,
V61, xxi., pp, 346-9,

JONE 1918] CONTRtBUTIONS TO THEOBT OP BAILWAT BATES SK)7

ventioB of Gdverumeat.^ On considering Professor Pigou’s
theories, cited below, I am disposed to attach less importance, in
pure theory at least, than I did to the limitation of land. Still,
I should not venture to describe as erroneous or imaginary a
distinction sanctioned by high authorities.^

Graphical Representation of Cost . — Under my first heading I
sought to appreciate the importance in railway economics of that
much-talked-of attribute “increasing returns.” The relations
between cost of production and quantity produced j)resent such a
variety of aspects as almost to defy the subtlety of speech, even
when rendered precise by mathematical conceptions. Similar
shapes designated by the same name, a supply-curve, are often
employed in a misleading manner with reference to quite different
circumstances. For instance, it may make all the difference
whether we are considering (a) long periods, or (o) sl)ort ones;
(b) the presence, or ($) the absence, of what^ Dr. Marshall calls
“external economies” (c) collective cost, or ( 7 ) that which
pertains to a single individual (or constituent grou])) ; id) the
rdgime of competition, or (5) that of mon('poly ; (c) the remunera-
tion of the entrepreneur as included in the cost of production, or
(e) as a residue distinguished from the entrepreneur’s expenditure.
There is a less mistakeable division between (z) the use of one
of the co-ordinates to represent price, the construction w^hich Dr.
Marshall has made familiar, and (^) the use of one co-ordinate i.o
represent the total amount of money demanded in exchange for
the amount of product represented by the other co-ordinate.®
There is a certain correlation between (corres])onding members of)
several of these dichotomies ; and it is therefore the less sur-
prising that throughout Professor Pigou should have adopted the
positive and I the negative attribute. The supply-curves which
he employs are mostly of the type obcdez ; while mine arc
primarily of the typea^ 78 €f. 11 is not to be expected, therefore,
that there should be a close similarity between our representa-
tions. But I am concerned to show that there is no essential
discrepancy.

For the purpose of instituting a comparison 1 construct in
Fig. 1 a supply-curve of the ty]:>e above distinguished as z ; and

1 See Colson, Cours S Economic PoK%we; (deuxi6mG edition), liv. i., p. 148,
liv. iv., p. 200, and liv. vi. passim,

2 Op. Pigou, op, city pp. 246-7.

* The f system is used by Mr. Flux in the Economic Journal, Vol. xv., and
commented on by the present writer. Vol. xvii. It is not quite identical with, being
less general than, Dr. Marshall’s curves of International Trade referred to in the
Economic Journal, Vol. xv., p. 69 and Vol. xviii, p. 541 et jteq.

208 ' , , THE BOOHOMIG JOURNAL ‘ [JUNE

T trpilsfer here a curve of the type | which I have employed in
my Section 1.'

For the present purpose it is not necessary to consider the
simplest and most elementary transactions to which such curves
may pertain : such tiiinsactions as international trade between
two imaginary islands, or the bargain between ideal hunters of
tw'o different tyjw's — say white emj>l<)yers and black employees —

In Pig. 1 SSo is a paraliola of whicli the eijuation is

whence

y-i' = j ydx - J {a-,r 4 ax'^ -i Jx *‘) ; y=JI (a- + nd. + ^x^) .

The unit in wliicb x is measured is a (=one inch). Accordingly MQ=2‘25 inches ;

inch. The demand-curve passes through D at the vortical distance
ot 2 inches irom 0, and intersects t\ie supx^ly-ourve at P. BD^ is a right lino
ol which the slope relatively to the vertical is 2/5^. Accordingly the slope of the
curve of marginal supply prices is Hvice tViat slope. BB^ intersects 88^ at T ;
nearer the origin than P as might be expected, the law of diminishing returns
acting.

as to tlie disiribiition of their joint quarry. ^ The curves of type e
proper to such conceptions are not considered here. Let us rather
suppose as riqiresenting, ajireeably to common usage, the
amount j* of, say, agricultural produce offered by a set of farmers
using implements, employing workmen, and l)aying I'enl. If the
ihcrease of produce did not involve any sensible (additional)

» See p. 352, Vol. xxi., Fig. 1.

• Compare Qmrterly /cnmia I of Econo^mes on the “Theory of Distribution/’
1904 ,

X913] , tomuiBV^jom iKEOBY of batbs ^9

fH^ssuro on;.tbe ifeo0 this s«pfily-<^rv6" would he. ‘Siip{)ose, a borir
i:ontal line* Btiit suppose that there is such a pressure; and ie^t
it first he of such a kind as merely to necessitate deej 3 er ploughing
and digging on the part of each cultivator, without otherwise
modifying the conditions of cultivation — in short, without
negative' ‘‘external economies.” The collective supply-curve
fiSi would then be obtained by sim})ly adding u]) the amounts of
f)roduct offered by each individual farmer at any assigned price.
The “general ” expenses consisting, suppose, entirely of rent,
would be represented by the area SNP : while prime costs are
represented by OSPM.

Kig. 2.

Here it may be well to remind the reader that there is some-
thing arbitrary or dependent on unessential circumstances in the
distinction between “prime and “general ” ns we have used the
terms. Suppose that labourers could be changed only after long
notice, and that labour and machinery were readjusted less fre-
quently than the amount of land variable in small parcels with
imaginary facility ; on such a supposition the rent might be
regarded as prime cost, the other expenses as general. The same
ordinate MP might now represent the price of that increment of
land which corresponds to an increment of produce. More
generally it is proper to regard the price PM as made up of two
(in general, more) portions, MK and KP, c(OTespondmg respec-
tively to the values (at the prevailing pric*of the factors of

210 THE ECONOMIC TOXJBNAL [JUNE

production) of that increment of capital and that increment of
' land which the entrepreneur would take on if free to distribute an
assigned increment of resources between the two uses.^ Even
where this freedom does not exist in reality, one factor of produc-
tion as compared with the other varying per saltum, there is some
theoretical advantage with a view to the problems which are
before us in realising that the price of the product is theoretically
not affected by the circumstance that the agents of production are
or are not varied continuously.

Professor Pigou improves the familiar construction of the
supply-curve by the addition of a new curve, that of “marginal
supply prices,” SS2 in our Fig. 1 . This curve is thus related to
SSi. If the ordinate at any )X)int of the abscissa, M, intersects
SSy at P and SS2 at (), the area OMQS is equal to the area
OMPiV.^ But the area OMPN represents the total expenses
incident to the prciduction of the quantity OM ; inclusive of rent
(the area PSN) and of entrepreneur’s remuneration, which by our
convention is included in the area OS PM, Accordingly, the line
MQ — or, more exactly, the little rectangle of which that line is
the height and a (small) unit of produce is the base — represents
the addition to the total cost incident to the production of an
additional unit.

But, it will be asked, is not this the very definition of
“marginal cost”? And have w'e not just seen that — however we
manipulate the distinction betw^een prime and general cost — the
marginal cost incident to an increment of produce is OP? How
then can that incremental cost be OQ? The answer is that both
statements are true. The same predicate “marginal increment of
cost” is truly coupled both with MP and with MQ ; if in the one
pfepositioii it is understood simpHciter , in the other proposition
as the logicians say, secundum quid. For MP is the increment
of cost consequent on an increment of production, the cost of
production of the units of commodity other than this increment
being supposed constant. That is, MP is the marginal cost from
the point of view of the entrepreneur producing a small part of
the aggregate output in a rdgime of competition. But MQ is
the increment of cost consequent on an increment of pmduction,

^ See Pareto, Cours d'Economie Politique^ § 718 (referring to § 100 - 1) ; and
compare Marshall’s analysis of the “ supply price of a knife as the sum of the supply
prices of its blade and handle.”-— Principles of Economics^ Book V., Ch. VI., § 1 ;
and his note on marginal product (with reference to J. A. Hobson’s theories),
op, cit,, p. 393, ed. 6.

5* In symbols, if y is the ordinate of SS^ Y that of SS.^^

f^Ydx=:xy.

1'913] CONTRIBUTIONS T6 THfe THEORY OP BAILWAY RATES 211

the price of the produced commodity not being supposed con-
stant.^ Kalheri account being taken of the circumstance that the
price is such that if a sale could be effected at that price the
expenses of production would just be covered, that covering price
changes (in the case supposed, increases) with the amount pro-
duced. Accordingly, MQ might be described as the marginal
increment of cost from the point of view of a monopolist.

In this connection mention may be made of another piece of
mechanism due to Ih’ofessor Pigou : the curve of ** marginal
demand prices.” ^ '^i^he relation of this curve to the ordinary
demand-curve may be shown as follows : Let DDi be the deniaiul-
curve in our figure intersecting (be sn]>ply-curve at P; the
curve of marginal demand prices. If the ordinate, not drawn on
the figure, at any point on the abscissa, J, intersects DDi at iJ,
and DD2 at Dg, the area OJDiD is equal to tlie area of the ro'd-
angle of w^hich the base is OJ and Hie height But the area

OJ DiD represents the total utility, or, in Professor Pareto’s less
equivocal phrase, “ophelimity” accruing to ilie ensiomers from
the quantity of commodity OJ (on llie supposition of their obtain-
ing it gratis). The corresponding money value is that wlncli would
be realised by a monopolist wTio practised discrimination of tlu^
kind defined by Professor Pigou as ideal’' — a conception w^hich
he has happily illustrated by the suggestion of a method wdu'reby
a monopolist of this particularly grasjnng ly[)e might conceivably
touch the total value in question, Accordingly, a monopolist of
this type w-ould push production up to, but not beyond, the point
at which the increment to the said total value is just equal to the
increment of total cost, that is, the point at which the curves Dlh
and SSo intersect, the point T in the figure, or the point^T^ on
the abscissa corresponding thereto. A nobler use of the two new’
curves will presently appear.

* Let X {-OM) be the produce, p{ = MP) the supply-prico, or cost of production
pec unit, xp {r:OMPN=OMQS) the total cost. Thou MP {p being

treated as constant) (the complete dilfcrential)=^ + a:~|^.

2 See Economic Journal, Vol. x., “Producers’ and Consumers’ Surplus.”

3 In symbols (corresponding to those used above with reference to supply) let
y' be the ordinate of DD^ T that of DDa* Then

Tx.

In the figure, DD-^ is intended to be a straight line inclined to the axis of E at
an angle with tangent 1. Accordingly DD^ is inclined to the vertical at an angle with
twice that tangent.

■* Economic Journal, Voh xiv., p. 391; Wealth and We^are^ p. 203. See also,
with reference to this kind of monopoly, Economic Journal, Vol. xx., p. 453,

212 . THB economic ,TOE|lNAIi [jt^KE

The moderately mathematieal reader will have no difficulty in
^translating these constructions into the form which I have
employed, above labelled 1. The curve Si in Fig. 1 might be
supposed to correspond to the curve PQR in Fig. 2, if we do not
attend to the initial convex part of the latter curve, rather suppose
it to start from 0 and be convex (to OZ) throughbut. The
abscissa OZ in Fig. 2 corres|)onding to OX in Fig. 1, the ordinate
in Fig. 2 a per}>endicular let fall from R on OZ — not

drawn in the figure) would correspond to the area OMPS in
Fig. 1. What line Ihen in Fig. 2 corresi>ond8 to the area OMQS
in Fig. ] ? It might be the ordinate of a certain curve derived
from OPQH in Fig. 2 which I have indicated as pertaining to
the rdgime of competition,^ the collective supply-curve (Gesammt-
angebotscurve) of Auspitz and Lieben.^ Or rather, as we are
not here explicitly representing the jirofits ol the entrepreneur
as varying with the amount of product, it is proper to take our
curve PQR as the cost-curve {Gesammtkostencurve) with the
interpretation (not that of Auspitz and Lieben) tliat the inter-
section of any right line drawn through the origin with that curve
designates the amount ofliered at the price represented by the
inclination of the line.^ With this interpretation the vertical
distance defined liy Auspitz and Lieben^ as the measure of Collec-
tive Utility iOeme\}inutzcn) corresponds to the area DTS in our
Figure 1.

I have given another construction in which the factors of
])roduction — in the case before us “capital” ( = labour -f imple-
ments -f waiting) and land — appear as co-ordinates. S|y the
amount of tlie former factor is measured along the bottom of the
page from the h'ft corner, while the other factor is measured
from the same jioint along the left side of the page. The cost k
of any two quantities of the factors (at prices supposed to be given)
is measured downwards on an ordinate perpendicular to the
j)lane of the paper. ^Phe corresjxinding amount of produce multi-
plied by its price (which the monopolist is free to vary), say ^
less l)y the cost k, gives z, the quantity which it is the object
of the monopolist to maximise. The con^ruction is such that z

1 Defined by mo, Economic Jouhnal, Vol. xxi., p. 358, and inoie fully by AuBpiisi
and Liebon in their Theoric des Preises, p. 13,

“ The construction ( thus interpreted will I think correspond to that which
Mr. Plux has employed in his paper on “Improvements and Rentability” (Economic
Journal, V^ol. xv) ; it being observed that he takes cost for the abscissa and product
for the ordinate, as in our Figure 1 B of Section 2 (Economic Journal, Vol. xx.,
p. 35).

* Op. cit, p. 370.

^ See Economic Journal, Vol. xi., p. 365.

1913] COKTHIBtTTIONS TO THK THEOKy OP RAILWAY RATES 213

is measured upwards from the plaue of the paper. In seeking this
maximum the monopolist entrepreneur will describe a path on
the plane of xy ; which will be a broken sort of path in case one
of the factors, such as land, comparatively with the other is varied
per saltum. This construction is applicable to a regime of com-
petition with a little modification. We may suppose different
entrepreneurs to move by different paths in seeking each the
maximum of the z pertaining to him. The height of ihe. average
z may be regarded as snuill or null : rather in deference to fact than
as required 1)5^ theory.^ Each entrejneneur ever strives to make
his z as great as possi])le. So each golfer in every match strives
to make the difference between his score and “bogey** augmented
by his handicap, as small as possibk' ; though on an average, in
well regulated golf links, probably the difference l)etween the
score and (bogey 4- handicap) is ztTo, or rather — having regard to
very bad players — on tlie wrong sid(' of zt‘ro. ’

8o far we have sii]>[)(^sed the curve of marginal sup])ly prices to
be ascending. Now let u.s consider a deseimding curve of the sort
such as SB in Fig. 3 (see p. 2M). If we retain the supposition
that the collective su])ply-curve is formed by sim[>l(*. addition from
the dispositions of the individual enti;:^‘f)renonrs, thi‘ sn]^}>ly-carve
SS' derived from SB (a(‘-cordiiig to the rule above given) will be
insignificant in a regnuc of compidilion. For it rejUTsents only
that amount of jn’odiiction which at any assigned pricii a (fords to
entrepreneurs a minimum of |)rofit — a position of unstable equili-
brium. But in a reginiv of monopoly it might well ha])pen in
the case represented tliat ]>rodu(*li()n might b(‘ stable at any point
between 0 and 0'.-

Jn order that the deseending sn])[)ly-cnrve may he significant
in a regime of com})ctition it must receive a difhu’ent interjireta-
tion. The height MP now denotes as Ixd'ore the firice at which
the quantity OM is e\oked^ in a state of industry a-dapted to
that scale of production. Ihit what coiaesponds to the curve SSj
of Fig. 1 in our first example, considered as representing the sum
of the amounts offena] by each enlrejireneur at any (one)
assigned price, is a quilt‘ different curve from SSi of Fig. 3,
an ascending curve, the “short -period** supply-curve. It
is here represented by a rightr line — in tlie luaghbourhood at least

^ On the theoretical point, see Scientia, Vol. vii. {1910), p. 92, and referonceH
there given. As to the factw almost all that is knf)wn J believe is well presented
by Ashley in the Economic Journal, Vol. xx., p. 350.

2 As noticed (with referonoo to the curve there employed) EcONOii^jc Journal,
Vol. xxi., p. 3C1.

3 Defined more exactly by Professor Pigou, Economic Journal, Vol. x,, p. 358.

No. 90. — VOL. xxiit. Q

214

THK BCONOMIO JOURNAL

[JUNE

In Fig. M the cnne of marginal supply prices SBS'S^ is a parabola with vertical
axi^ end apse at />'. 11 AJ)~-b 0.1—20, OS~-2a‘^-* h; the equation of the curve
referred to () us cngm i'.

F -6 4 ^{jc - 2 a )^.

Prom this tlu‘ expression for // the ordinate of tlie snpply-curve is obtained by
putting

t(i- j ' Yih' = 6.1 f l.L'^ - + 2a ‘-'.-r'.

Whence y-h-\ 2a-- ox -I-
S' betvM'cn the two ciinfs

There is a minimum of y at the point of intersection
This ju'opertv is general ; since

and accord ingly ^\hen F-//, —Q. Jn order to construct a simple system of

‘ ' cl r

Oiori peiiod supply cun os, loiiricd by right lines with a positive slope of 45“ (Cp.
Ph oNOMio JoviiNAJ., Vol \v,, p. 68), put

//EE.r 1 ;

where i 2a" oj i x. Then for the equation to any line of the family,

wc ha\c

?/-.i

where j' is the nhscissa of any point on the curve SS'Si. For instance, when
y-a{- ()M), \p(y)~bi-l^a- a; and accordingly the equation of the corresponding
line is

- a;

the equation of a line passing through P, the broken line in Fig. 3. In the figure
the unit a is taken as three-quarters of an inch, and 6 is taken to be half an inch.
Accordingly, OS { — IVQ')^2 inches. The demand-curve is a right starting
from the point 1) wliich is at tlie height 2*5 above the origin. This demand-curve
intersects the suijply-curvo at P of which the height is inches. The slope of DD^
with reference to the vci’tical is Accordingly that of DD^ is The intersection
of DD^ witlf/S/Sg (not shown m the figure) is at a greater horizontal distance than P
from the origin ; as might be expected, the law of increasing returns acting.

1913] OONTBIBITTIONS TO THK THEOBX OF BAIIrWAY BATES 215

of any, point P on the snpply-cnrve, for it may be Biipi[x>soil lower
down to twist and cut the axis OY near 0. The construction is
explained in my review of Mr. Cunynghcme’s Geovietrical
Political Economy in the Economic Jodbnal for 1905 (pp. 66-68).
For the sake of convenience I virtually made the assumption
which Professor Pigou has made on perhaps other grounds, that
*‘the price at which anybody supplies a giyen quantity of coift-
modity is made uj) b}' the addition of two parts, one depending
on the quantity that the person hinjself supplies, and the other
upon tjie quantity that the whole market collectively supplies.” ^
The ascending part of the supply-curve SSi is similarly to be
interpreted, and not as the curve SS^^ in Fig. 1.

As in the case represented by Fig. 1 we may here uerive from
the demand-curve DDi the curve of rnargiual demand prices DD^.
As there, the intersection of Dlh with determines <he

maximum of Producers’ + Consumers’ Hnr})lus,.not subject to the
condition that prices are assigned by competition. Jt might be
described as the aim of a monopolist, but now a monopolist of a
very peculiar kind, a monarch of enlighteiKHl benevolence who,
surveying the vast plexus of transactions throughout the com-
munity, would wish the terms to he altered in such wise as to
increase (the money-measure of) the aggregate of satisfactions.
This maximum of satisfaction thus aimed at transcends that which
is attained by laifisez-faire, the H- V of Dr. Marshall’s deep
mathematical note xiv. The latter might be compared to the
state of health and efficiency resulting from the piactice of
what is natural and habitual in diet and therapeutics. An arbi-
trary departure from that practice, based on a mere association
of ideas, like the inediawal shniJia si}nilibus, may he compared
to crude Protectionism, as likely to do harm. But we are not
thereby forbidden to depart from vhat is called natural, in a
direction pointed out by science. One of the directions in which
it may jnove possible to imjirove on laisscz-fairr is afforded by
Professor Pigou’s doctrine' supplementing that of Dr. Marshall
with respect to the “limitatkins of the abstract doctrine of
maximum satisfaction.”- The new and less abstract maximum,

- F', as we may call it, transcends tlio state of unrestricted
competition of which it is sometimes said by mathematical
hedonists, and implied by practical free traders, that “this regime

^ Pigou, Kconumic Journal, Vol. xiii., p. 21 ; the roferenoc to “ demand ” there
made being omitted to suit my context.

2 Prmciples of ICconomics^ Book V., Ch. xiii., p. 4C7 et seq,; referred to by
Professor Pigou in tlie Economic Journal, VoI. xi., p. 3CG.

Q 2

216

THE ECONOMIC JOtJENAL

[JUNE

realises the maximum of satisfaction and the minimum of sacrifice
for each of the co-exchangists.” ' To advance some way in the
direction of H' - V' may be beiter than to have attained if - F ; ^
just as you are higher when half-w^ay up Mont Blanc than on the
top of Snowdon.

Increasing Heiurns.—l cannot claim to have anticipated this
strblime use of the new curves.'^ Jt is relevant here as bearing on
a question whicli I have particularly considered, the signification
of the term “increasing returns.” Tn view of much tedious dis-
cussion in recent literature I sought to fix the meaning of that
evasive term. I distinguished as “primary” and “secondary”
two definitions respectively importing that an added dose of
productive power increases (1) the marginal, or (2) the average
produce. Among other considerations in favour of the primary
definition, I remarked : “When we contemplate the working of a
competitive as bearing on the interest of the community,

from the ixiint of view of the jihilosophic statesman, then we
’svelcome the jhenomenon of Increasing Ileturn (or deprecate its
contrary) as lending to (or from) some (piantity which it is pro-
]K)sed to maximise. But the criterion of such a maximum is
analogous to our prhnary conception.” ^ Now the point of view of
this philosojhic statesman is exactly that of the benevolent
monarch whom we have just imagined — except that the view of
the latter is assisted by tlu'. new implement which has just been
described. Accordingly, 1 clahn Professor Pigou’s authority for
my priinarij definition. ))e sure, the denotation is generally
the same for the two connotations ; hut not alw^ays, as we may
see in Fig. 3, where the tract (of produce) AO' presents decreasing
returns according to the first definition, but increasing according

^ I quote from TTisioirr. den doctrines Economiques (p. G36, ed. 2) of Gide and Rist,
who are transcribing faithfully enough the doctrines of the mathematical
economists.

- Compare Pigou, Wealth and Welfare, p. lOG.

3 The system of co-ordinates here called ( (above, p. 207) may bo adapted as
I have indicated (Economic Jouhnal, Vol. xi., p. 359) to the system of long-period
supply curve with intersecting short-period curves, proper to increasing returns in a
competitive rajime. The area DTS in Figs. 1 and 3 would then correspond to
a lino in a modified form of Fig. 2, the greatest vertical distance between two curves
which are modifications of Auspitz and Liehen’s Collective Cost and Collective Utility
Curves ; the distance measuring the total utility called by them Oemeinnutzen ; {oj),
cit . , p. 370). But neither they, I think, nor I proposed to employ this conception
for the purpose of contemplating the ideally best distribution of resources; for
instance, that as between two classes of industries of the types pertaining to our Fig. 1
and Fig. 3 (Diminishing and Increasing Returns) it would be theoretically advan-
tageous to diminish the output determined by laissez-faire in the former case and to
increase it in the latter.

* Economic Joubnal, Vol. xi., p. 359.

1913] CONTKIBUTIONS TO THE THEOEY OF EAILWAT RATES 217

to the second. My interpretation is confirmed by Professor
Pigou's use of terms in the important passage, too long to quote
in full, in Wealth and Welfare,^ which resumes *‘the general
analysis of distribution developed by Dr. Marshall.” The
of diminishing returns to individual factors of production,” it is
there said, ” states that the increment of product due to the
increase by a unit of any factor of production in any industrial
field will in general be smaller, other things remaining the same,
the greater is the supply of that factor already employed there.”
If I mistake not, a typical instance of this doctrine is afforded by
our introductory lemma ; when the land being considered as coii-
aiant the “capital” laid out thereon is increased. As shown by
the rise of the curve SSi (considered as a sliort-periotl supply-
curve) in Fig. 1, the increment of ])rodiict due to the incivase by
a unit of “capital ” will be smaller (in tlie neighbourhood at least
of the point of equilibrium) tlie greater lh(' supply of that factor
already employed. Assuredly, the law of diminishing I’eturns
which such a factor fulfils is diminishing returns in the primary
sense. Professor l^igoii evidcuitly treats (hai as the sense of the
term when he does not even notice (hat in tlu' same circumstances
increasing returns in the secondary sense niiifii prevail— 'initially.
Yet the term “increasing returns” is largely employed in such
a case by the leading American writers on railway and
general economics. One whom 1 shall often quote as not
only the latest but also one of the greatest of tliem, thus ex-
presses himself : “The law originates [irimarily in the fixeid condi-
tions attaching to the heavy capital investment — the fac( , namely,
that fixed charges up to a given point of saturation tend to remain
constant absolutely : but become ju’oporfionately less as the
volume of business ex[)ands. From this fact, therefore, rather
than because of any marked 'economies of largc'-scale |>roduction,
may it be affirmed that railroads oH'er a notable example of the
law of increasing returns.”^ It is in virtue of this fact that “a
railroad theoretically presents a clear (‘xamj)le of an indiKsiry
subject to the law of ibereasing returns.”

Joint Cost . — In the case of another imj[X)rfant term, Joint
Supply (and its synonyms), 1 am disposed to a(‘-cept Jh*ofesBor
Pigou’s ’'usage for the primary definition, while admitting as
secondary the definitions sanctioned by the authority of railway
experts. In the first section of this study 1 have given a general
definition covering the cases included by the American writers ;

1 Part II., Ch. II., § 3. - W. Z. Kiploy, Ttailroads (1913), p. 99.

^ Op. cit, p. 71 etseq. Cp. Economic Joubnal, Vol. xi., p. 370, last par.

218 THE ECONOMIC JOUBNAL {jtJNE

but I place in a special category the cases excluded by Professor
figou; for instance, where the Joint Cost depends upon a
quantity such as total weight or volume which is the sum of two
or more items each pertaining to one of the joint products.” ^ My
typical examf)lc, clover and honey, fulfils, I think, Professor
Pigou’s definition that “two products arc supfdied jointly when a
unit of investment exjicnded upon increasing the normal output
of one necessarily increases that of the other also.”^ This is not
evident at first sight ; for, of course, apiculture without clover
seed would not result in an output of clover. Professor
Taussig makes a vejy natural criticism when referring to
Ih'oi'essor Pigon’s example of joint cost, back loading, he
remarks: “Now in back loading, as in other cases where
‘ discriminating ’ jates are made, it cannot be said that a railroad
‘ ncccssarihj ’ (1 follow Professor Pigou’s example in italicising
the word) puts on the market a supply of one kind of service when
it sii])plies another kind. There are always some separable ex-
penses : For example, in the case of back loading there are the
terminal expense's and the extra cost of hauling a loaxled train
over that of an empty onc.”^ Ninety-nine out of a hundred
critics would probably endorse this criticism. And they would be
justified in so far as ninety-nine out of a hundred writers might
be supposed to use the phrase “increasing the normal output”
as meaning no more than “increasing Die output.” But it is
not to be sup])osed that the disciple and successor of Dr. ?Iarshall
employs the term “normal” as a merely decorative e2)ithet.
Professor Pigou has, 1 think, all along very pro})er1y used
“output” as the output of something that is demanded, and has
implied that the demand is not of an excej)tional, perfectly
inelastic, character. Tt follows that the output necessarily tends
to be, and we may therefore say normally is, increased by the
diminution of its marginal cost. Now a diminution in the marginal
cost of producing a commodity such as the trail s][K)rtation of a
back load is caused when new trains are put on — not merely to
meet a temporary emergency, but as a |ierfnanent arrangemeut —
to meet an increased dirccl traffic. But the marginal cost of an
article transported by a returning “empty’’ is not similarly
increased by another item in the back load. "These statements
are not affected by the existence of “terminal expenses ” and the
like.

^ Economic Jocrnal, Vol. xi., p. 560. Cjuiparo the representation of Joint
at p. 460 of Vol. x.

^ Wealth and Welfare , p. 215.

" Quarterly Jourml of Economics, Vol. xxvii. p. 380.

191S] OOKTBIBUTIONS tO THE.!rHEOBY OP RAILWAY BATES 219

It were to be wished;' perhaps, that Professor Pigou had
ejjipressed himself in terms less liable to misconstruction. But, in
fact, it would not be easy to give a more unequivocal definition
without making it either very long or very technical. For an
explicit description which, I think, nearly covers the instances
contemplated by Professor Pigou I again quote Professor
Eipley ; —

“Bailroad expenditures, as Taussig clearly pointed out a number
of years ago, ajfford a prime illustration of the production of several
commodities by a single great plant simultaneously at joint and
indistinguishable cost. The classical economists illustrated this law
by the joint production of wool and mutton and of gas and coke.
In both of these instances neither commodity could conceivably be
produced alone. . . . The law of joint cost with r^forenco to the
production of transportation is somewhat different. Compare, for
instance, the can*iage by a railroad of thousands of passengers and
different commodities in every direction, under varying com^itions,
singly or wholesale, slowly or hv express, over* a given set of rails
every day; with the operation of a great refinery, producing simul-
taneously kerosene, gasolene lubricating oils, and greases, as well
as various odd chemicals. Both are examples of production at joint
coat, but with various important contrasts. In the refinery all the
costs are joint. All the processes are interlocked. Eveiy iiicn^ase
in the output of kerosene produces pari passu an increase of the
other commodities. On the railroad not all, but only a ))art of tbo
costs are joint, in such manner as 1ms been shown. For, from tlic
joint portion of its plant — roadway rails and locouiotives — the railroad
may produce transportation of different sorts quite independently.
It may choose to especially cultivate its passenger traffic or cotton or
coal business. ^

The “important contrasts” so clearly exhibited by Professor
Eipley would not be materially affected if the increase of other
commodities pari passu” vrith kerosene required some special
or separable expense ; just as the output of copperas as a joint
product with wire, which Professor Pigou by implication in-
stances as a genuine case of joint supply, requires some special
cost for the erection of necessary sheds.

A short but technical definition may be based on the form of
the (mathematical) function which expresses the relation between
assigned quantities of several comn^odities, Xy y, w, Vy Wy (Src.,
and Zy the cost of producing the whole set. Materials for the
construction of such a definition may be found on a former page.®
There may be some doubt as to wliere the line should be drawn
which separates the prim.ary from the secondary definition of
Joint Cost. But there can be no doubt that it should be drawij

^ Op. city p. 67. 2 Wealth and Welfare y p. 220, note 1.

^ EroNOJiic JouxiSAL, Vol xi , p. 500

220 THB ECONOMIC JOXJBNAL [JUNE

well aboT^e the case in which the total cost z is related to the
quantities of the products simply as a function of their sum : that
is, in the manner below indicated by a quotation from Professor
Pigou. I apply the term “sum” to the addition of adjusted units
(like those below supposed for jvease and beans), ordinary (e.gf.,
avoirdupois) units each niulii])lied by a proper coefhcient corre-
sponding to s])ecial t^osls.^ 'J'he ground of the distinction lies
herein, I think, that in the case of joint cost proj>er we cannot, and
in other cases W(‘ can (theoretically), predict the relative charges
for different coniinoditi(‘.s without icgard to tljc demand for other
commodities.

'' Cost of Service Principle. — lint the question what is the
proper or })rimary definition of th(‘ term doint Cost is itself of
secondary inter(‘st. Professor J^igou will perhaps alknv the Ameri-
cans to have their tenniiu)logy if tlu^y will concenle to him his
projjositions. The .main issue, of far df‘eper importance than the
definition of a word, is whether Professor Pigou is right in con-
cluding that, in the* regulation of railways, discrimination or the
“value of service” principle should, after an initial — probably
brief— stage, give place to the “cost of service” principle.^

First appearances, it must he admitted, are against ITofessor
Pigou, Psing t('rms in a stiange sens(', and accusing distin-
guished economists of common fallacic's, he j)ropounds a thesis
contradicting tlie doctrine of the higliest authorities on railway

1 The hoarin" of Joint. Co^t proper on the power of predicting conipetitivo price
may bo ilhi.'iti'ated by siipposnig that normal oqui librium, after having boon roacbed,
is disturbed by a change in doinaud tor each ol two ooinn.odities ; and observing the
effect according as Joint Cost pnq^'r is absent ('r present Jjot tho cost, 2 , ^F{T),
whore (1) T=:ay -\ by -{-cu ! . , ar.d a ?/, u .. aro assigned quantitjos of the eominodi-
tioft designated A", Y, V . . Tlo'n lim respective prices, in cturipotilive equilibrium, of
tho commodities A", Y, U aro F’[T)a, F’{T)h, F\T)c,... Now let a change in the
demand for X and Y occur, 'rhou in general lliore will he a change in volume
affecting cost. “Cost is unknown until volume is ascertained,'’ as Professor Bipley
well says (loc. cit.). Put in tlic case before us the ollEcot on price may well be small,
if there aro many coinmoditms ; the now sob of prices boing F\Ta At)af F'{T
At any rate Uic relative prices, the ratios in which the total charge is distributed among
tho different commodities, arc unchanged. (Compare ]\rarshall, Principles of
Economiesy Mathematical Note, xvii., i)ar. 1). Nc'st(2) let T~ ax-\~2hji'y-\-by
Now when ,r and y are “ interlocked,” to borrow a phra^^e irom Professor Bipley, the
prices are no longer as independent of the quantities as before. The new price of X is
now F\T-i AT)[{a \-2h{y f A?/)] and the now price of Y is F'iT-i- AT}[a-^2h{x-C Ax)].
It is evident that the prediction of tho prices from tho costs is not such a simple
affair as before. Once more <^3) lot T~ajr-\ 67/-+..., or more generally T=(l>{x) +
The disturbed price of each commodity will now involve, in a more
disturbing manner than in case (1), the quantity of that commodity. ' But it will
not do BO in the same way as m (2). It is a nice question whether this case should
be described as Joint Cost im>per.

. ^ Wealth and Welfare, p. 234, and context.

1913] CONTBIBUTIONS TO THE THEOIIY OF KAII/WAY RATES 221

economics. What though in power of mathematical reasoning he
wields a bow which few can bend ! Does he not aim with it at
the clouds? An airship, indeed, would seem to be just the object
which he has in view. For his refined reasonings would be
admittedly sound if all transportation was effected by flying-
machines. For then presumably each flying-machine might be
worked to the full for one kind of traffic only. The case would in
this respect resemble that of those railways for which discirimina-
tion is not claimed, where “each has in the main its own expenses
of operation as well as its own road-bed and other plant.” ^ But,
as it is, “the freight service of a railway comprises the carriage
of all kinds of goods simultaneously from the most valuable high-
priced commodities, such as silk and satins, down to lumber,
coal, cement, and even sand.”‘^ The attribute of limitation in
the suf>ply of land, rejected by Frol'essor Figoii,^ seems now to
I'ise up against him. For it is ])art]y on account of this limitation
that a plurality of railways each worked to the full for one kind of
traffic is unthinkable.

Such are the first appearances. But on reflection, in the light
of the principles which have been above recalled, it >vill be
discerned that if the flying-machines are perfectly competitive, no
essential difference is introduced by their having mixed loads ;
supposing, with Professor Pigou, that “a unit of investment is
responsible either for x units of one kind and y units of the other,
or for (x + h) units of the first kind and no units of the second,
or for no units of the first kind and (//-f-A) units of the second.”*
Thus, in our introductory lemma/' suppose that the produce in
wdieat is destined for ditferent kinds of cakes and bread. The
price of a unit of wheat for difTcnmt destinations would still be
the same. And if the same ground is equally suitable for pease
and beans — joint effects in the wuj of rotation of ci-o])s being
abstracted — then if the prime costs Hn the sense explained)
of (properly assigned) units of pease and beans are the same, the
same wall be the selling price for pease and beans of units (so
assigned). The orthodox economist stating this familiar doctrine
would not be put off' by the affirmation that a great part of the
cost was indeterminate, being joint for all the products in large
part ; that it is impossible to allocate the amount proper to each
product. This objection might be made to Professor Wiener’s

^ Taussig, Quarterly Journal of EconomieSy Vol. xxvii., p. 379 ; and cp.
p. 380.

“ Hipjfw, op. cit.y p. 169.

Wealth and Welfare^ p. 218.

Above, p. 207.
Above, p. 208 el se(i.

222

tm BCONOMIC JOTJBNAL

[JUNE

doctrine of “imputation”*/ or to the pretension, censured by
Mill, of assigning, in a philosophical sense, the amount due to
each of two concurrent causes — like the blades of a pair of
scisecrs. But this indeterminateness is quite consistent with the
determination of value in exchange — proporiioned to marginal
cost — in a regime of j^erfect competition. But the prices so deter-
joined, according to the received theory, afford a maximum of
advantage to ])roducers and consumers. A similar maximum of
advantage must be ascribed to the charges for mixed loads
which would be ado])ted by airships conceived as sufficiently
luuueroiis to realise perfect competition. Railways, indeed, cannot
be conceived so numerous as to bring about that scale of charges
through llie play of competition ; but it is to be believed that maxi-
mum advantHge would be attained if there could be imposed
by authority in this case that proportion of charge to marginal
cost which is know^n in other cases to have that desirable result.

I must confess to have countenanced an erroneous view in this
matter. Concerned mainly with monopoly, I intjidentally mis-
stated a law^ of competition. 1 argued that in general a single
undiscriminated price might be replaced by two (or more) dis-
criminated prices with advantage both to the (monopolist)
producer and the customer. For any value of monopolistic revenue
or any value of customer's benefit assigned at random the
maximum of advantage to the other party will be realised not by
a unique price, but by discrimination. But I omitted to notice
lhat the case in w'hich tlie initial unique price (or the assigned
amount of advantage to one fjarty) is that which occurs in a
regime of perfect competition is a particular limiting case of wliich
the statement generally probable is knowm not to be true. The
general reasoning breaks down when we suppose the initial
(unique) price of t^vo commodities to be equal to the (equal)
marginal cost of eaoh.“ In this case if any neighbouring system

1 Referred to by Marshall, Principles of Economics ^ p. 39a (od. vi.), and unfavour-
ably reviewed by the present writer in the lilooNOMic Joubnal, Vol. iv., p. 281.

“ It was shown in a previous paper (Economic Jottunal, Vol. xx., p. 446 et seq.)
that if h is the undiscriminated monopoly price of two articles (or spooies oi the
same article), 6(1 t iji)6 (1 -f- r;^) are any two discriminating prices in the neighbourhood
of h ; then the curve representing that the Customers’ Surplus (considered as a function
of and %) is constant (the same as what it was when and m eaoh=:0) and the
(likewise interpreted) curve of Constant Producers’ Surplus intersect^ in such wise
that it is in general possible to adopt a system of discriminating prices which will be
better both for the producer and the customer than the undiscriminated price 6. It
is supposed (in the absence of joint cost) that the cost of production is the sum of
two costs each a function of (the amount of) one of the products {loc, cit., p. 460) ;
or more generally a function of the sum (or oi a linear function) of the quantities
produced (above, p. 220). The psoposition remains true in general when by b

1913] CONTBIBUTIONS TO THfi THEQEt OF EAILWAY BATES 228

of discriininating prices be assumed, it will be the interest of one
or both parties to return to the unique price.

I subscribe, then, to Professor Pigou's thesis ; but with two
considerable reservations, pointed out by Professor Pigou
himself.

Firstly, if a railway cannot be made to pay with rates and fares
assigned on the principle of cost of service, it is better that it
should iDractise discrimination than that it should not exist. More
generally, let it be supposed possible to operate the raihvays of a
country so that the marginal cost of each ton-mile is the same.
Then the maximum of the type II -V is attained. But it may be
better to pursue the ty[)e H' - V' by employing discrimination so
as to increase the output of transi)ort for which the demand is
very extensible, and where the advantages of increasing returns
are thereby secured. It might be one of the exceptions to the
general rule that there should be equality, of “marginal net
products” in order to secure maximiun satislaction.^ No doubt
the conditions. are a priori improbable.- But there is si)ecific evi-
dence of high authority for tneir existence ; so far as we may thus
interpret the dicta of the experts, such as “Much of this business
is made ix)ssil)le only by sjx)cial rates aclapled to the case in hand.
A higher rate . . . would kill the business.” “To compel each of
these classes of goods [silk and satin, . . . cement , and even sand]
to bear its proportionate share of the cost of carriage would at once
preclude the possibility of transporting low-priced goods at all.”'*^
The testimony of high authorities would, no doubt, carry even
greater weight if it should be repeated with a full recognition of
the a priori improbability to which Professor Pigou has called
attention.

Secondly, let it be granted that tl)e cost of seivice princijde,
the system of charges which would be realised by perfect competi-
tion, is ideally the best. Yet with regard to a system so complex,
how can w^e ascertain in the absence of competition w’hat charges
would be fixed by competition? The attempts to do so for railway

we understaud not only the monopoly price, but any unique price for the two
articles. But in the 'particular case when the marginal cost of producing the
amounts saleable at the unique price h is just equal to h the proposition breaks
down ; the curves do not intersect, but tcnich at the point (t 7 i =0 > 7 a = 0), in such wise
that it is not possible to move off from that point in a direction advantageous
tu both parties. It should be observed that the existence of a maximum at this
point is not inconsistent with the possibility that some other point represents
greater advantage both to producer and customers, as suggested in the text (p. 215).

^ Cp. Wealth and Welfare^ p. 107. - Op. cif., p. 211 et aeq,

3 Ripley, Railroads^ pp. 162, 168 et passim. The dynamic use of discrimination
claimed by Professor Ripley would, I think, be admitted by Professor Pigou
as pertaining to an initial stage {op. cit,, p. 234).

224 THE BCONOMIC JOUBNAL [JUNE

rates have often proved ludicrous. They remind one of the pre-
tension sometimes made by politicians to tell us what some dead
chief — Mr. Gladstone or Lord Beaconsfield — would have thought
about a measure which was never before them. The defunct
authority ought at most to be invoked only to sanction a general
line of policy, uot to famish details such as, say, the items of a
tarifl’. iVs Professor Pigou says: is plain that anything in

the nature of exact imitation of simple competition is almost im-
possible to attain.’’ ... “A considerable gap between the ideal
and the actual is likely to remain.” ^

The im])raci.icabilily of the cost of service princi])le seems to
be largely the gnmnd on which it is dethroned by leading
economists from the sovereignty which it might otherwise claim.
Professor Ripley b(‘gins : “There can be no question that for an
indispeiisabl(‘ public sc'rvice like transportation, conducted under
monoi)olisti(*. conditions, the ideal system of charges would be to
ascertain the cost of c'ach service rendered and to allow a reason-
able margin of proht over and above this amount.”^ But he goes
on, in view of the difficulty of ascertaining those charges, to
attribute a position of collateral supremacy to the principle of
value of service : “Two general tlunries governing the rates
chargeable by railways are entertained, known respectively as
cost of service and value of service. . . . M either of these views
[pertaining to the two theories] is entindy sound by itself. Both
have large elements of truth in them. Each qualifies the other ” ^
“Our final conclusion then must be this: That both principles
are of equal iniportance, and tliat both must be continually invoked
as a check upon each (dher.”'*

These dicta no doubt embody the highest ])ractieal wisdom.
And it is perhaps vain to desiderate that tlie limits of these prac-
tical principles should be defined more closely by reference to the
more general conditions of welfare, the “e(]ualiiy of marginal net
products,” or the still more ideal princi()le that the money measure
of economic salisfactions should be as great as possible.

Theory of Liniitcd Monopoly . — Nor do I attempt here to
formulate Ibe relation between the cost of service principle and
the mixed modes of monopoly which are discussed in my second
section. Suffice it lo submit that in the present state of scientific
opinion about the subject those discussions seem not otiose. In
this part of the work 1 have obtained sup})ort from the adjacency
of Professor Pigou’s constructions at two points. First, he lends

^ cU. , p. 265 fit seq.
Op. cit.] pp. 166, 167.

- Op. cit., p. 168.
* Op. cit., p. 184.

19133 CONTBIBpTIONS TO THB THEOBY OF BAILWAY BATES 2^6

countenance to the use of a right line for the demand'-curve as a
device for exploring the probabilities of more concrete cases;
though he himself seems to use the construction chiefly for the
sake of convenience.^ I am fortified in the assumption that the
right line may be provisionally taken as the type of the demand-
curve pertaining to the customers of a railway company.^ I am
therefore confirmed in the deduction that discrimination accom-
panied with a moderate control is likely to be better, both for the
customers and the monopolist, than monopoly forbidden to
discriminate.^

In this and other theories 1 have largely employed a sort of
Probability which has been described in this journal as a priori*
and elsewhere perhaps more unequivocally as “unverified.** This
species of probable inference bears to the more solid parts of
statistics and economics a relation something like that which
Adam Smith has pointed out between literary and rnathematicial
compositions. The authors of the lailei kind, he says, “may
have the most perfect assurance both of the trutli and imix)rtance
of their discoveries; and accordingly they are, much more than
the others, “indifl'erent about the reception which they may meet
from the public.” ^ Now the unverified or non-statistical part of
Probabilities, though it is but common sense reduced to formula,
yet is not so commonly recognised, not so obviously objective,
but that those who employ it should desiderate the approbation
of good authorities. This sort of confirmation is largely affordiul
by Professor Pigou, who employs this sort of inference repeatedly
and with respect to the most momentous interests.^

The problem in my second section, which comes nearest to

1 Once at least to show that as there is nothbig knowable in this simple case,
“ our ignorance would not be lightened ” by abandoning the assumption of linearity
(p. 107). ;

But the claim which I have made in favour of the right line that it is inter-
mediate between the convexity predicated by Dupuit and the concavity predicated
by Professor Pigou (Economic Journal, Vol, xxiii., p. G5) must be retraefced. It
was based on a misinterpretation of Professor Pigou’s doctrine concerning the third
differential of utility {Industrial Peace, p. 70). I forgot that the theorem related
not to a particular commodity, such as railway service, but to money income, being
in fact an improved version of what I bad myself (Economic Journal, Vol. vii.,
p. 659) described as ‘ ' the cirenmstauee that as the income is increased by equal
increments the differences between the successive increments of utility become loss.'^
My misapplication of the doctrine was facilitated by a misprint in Professor Pigou’a
statement of it.

* Economic Journal, Vol. xxii., p. 200.

* Economic Journal, Vol, xx., pp. 287, 469, 463 et passim. Article on “Prob-
ability ” in the Encychpadia Britannica (11th edition), Section I.

^ Theory of Moral Sentiments, Part 111, Ch. 2.

® As I have pointed out, Economic Journal, Vol. xiii., loc. cif.

226

THE ECOiNOMIC JOUBNAL

UUNB, 1913

one of those which Professor Pigou has handled, is that which
relates to the effects of discrimination in a r^.gime of monopoly.’
Supposing with him that the law^ of demand is linear, and that
the law of constant refnrn holds, T find with him that the mono-
polist will produce the same quantity after discrimination as
before/^ But 1 have not af tended particularly to the alteration
of the output: which, as pointed out by Professor Pigou, has
not the significance in a regime of monopoly which it has in one
of competition/'^ He uses it here only as a stepping-stone towards
a (fuaesituni wliich I have sought more directly.

The only otlnu' remark which seems called for in connection
with the problems in my second section is that they are nol
open to the criticism which has lately been directed against
Professor Pigou as one “trained in the mathematical school,” and
ac^cordingly apjdying a well-rounded theory of monopoly wliidi
does not take account of the incompletenesfi characterising
rtionopoly in the concrete. My conception of a monopolist seeking
a maximum of gain, subject to linutatioyis imposed by the threat
of competition, by public spirit (or State control), admits, I
think, of degrees much clearer than the expressions commonly
employed in a similar connection, such as “equal sacrifice,” or
“not charging what the traffic will not bear.” ^ Not that I mean
to endorse the criticism as applicable to Professor Pigou. A sense
of continuity is not likely to be wanting in the .vdlower of him
whose motto is Natura vov facit solium.

F. Y. Pdgewokth

^ Wealth mul Welfare, p.

From tho equatioiis indicated at p. 440 et seq. in the Economic Journai,,
V’^ol. XX., it appears that if and £2 are the proportional deviations of the output
in consequence of discrimination from what it was before discrimination

since - i^/(l -f- 8; ^ 2 = -> 8).

Loc. cit., § 17.

Quarterlj/ Journal of Economics, Vol. xxvii. (1913), p. 384.

» See Sect. 2, p. 216 (EroNoMH' Journal, Vol. xxii.) et passim.

REVIEWS

English Loral Government: the Slorij of the King’s Ifighway.

By Sidney and Beatrice Webr. Miongmaiis. 1913. Pp.

x + 279. Price 7.?. 6rf.)

Students of English Local riovcvmnent, in common with
the community at large who suffer from the defects of that
Government, though they may not study eithtjr their causes or
their cui’e, owe to Mr. and Mrs. Sidney Webb, to whom they
already owe so much, a new debt of gratitude for the Story of
the Kinej’s Highway. The story is well told. The lessons to be
drawn from it are clearly brought out, not in a spirit of
dogmatism, but by skilful presentment of such facts and con-
siderations as are essential for a true underslanding of the road
problems, which for centuries baffled our forefathers, and some of
which remain to puzzle the reformer of to-day. The book
contains a great mass of material : an exposition of a very com-
. plicated and little-known branch of law ; a collection of facts of
great historical and antiquarian interest ; and a scientific study of
most important questions affecting the organisation and adminis-
tration of government, which, after many centuries of inter-
mittent neglect and spasmodic effort, are still in great part
unsolved. And the authors succeed in weaving the whole into a
story iKissessing almost the fascination of romance; not, indeed,
one of the breathless romances of to-day, but one of the leisurely
eighteenth-century kind, such as delighted Sir Walter Scott’s old
friend, who knew that, even if she w-ent to sleep during the
reading, the conversation in the cedar-parlour would still be going
on when she woke up.

Nine chapters are devoted to the past, and one short chapter
to the present and future. The conclusions as to “what is to-day
required in the organisation of our highways ’’ are contained in
one or two short paragraphs at the end of the book. This alloca-
tion of space is more easy to justify than would appear at first
sight. The true direction of reform for what remains to be

1228 ECONOMIC JOtTHKAL [jUNK

reformed is made abundantly clear by a study of the failures, the
record of which forms the bulk of the story. Indeed, the book
might have had a second title, “Muddling Through.” The whole
history is one long story of failure — failure of central organisa-
tion, failure of local administration, failure to provide funds for
decent maintenance, failure to put the financial burden on the
right backs, failure to make even a tolerably satisfactory use of
the money that \\as spent. And yet, spite of all these failures,
which no one who reads the history can deny, in the year 1913
the King’s Highway in England passes over what are unques-
tionably* the best roads in the world.

How" did we get them? 1^he question is more easily asked
than answered. The materials for an answer are mainly wanting.
But this much at least is (dear. The original conception of a
road — its legal conception still— was not a strip of land, with
definite boundaries and a specially prepared surface, but merely
a “right of way enjoyed by the public at large along a ccjrtain
customary course.” In early British times the roads were cer-
tainly of this latter kind, and the Bidgeway along the top of the
Berkshire Downs, abov(‘ the Vale of the White Horse, remains
to this day as an (*xamp]e. Then came the Bomans, and built
roads in the modern s(ujse all ov(‘r the (country. 'Jdio bulk of them
are in use to-day, and on the most famous of all, the Watling
Street, the Boman ))av(‘m(mt was actually in situ near Atherstone
within the memory of men still living. But h(U'e and there, as
on the line of llie Eosseway, near Leamington, or on the Ermin
Street, near Epsom, which Lord Bosebery lately reintroduced
to the notice of the ])iiblic, they liave practically dropped
out of use, and have ceased to be highways except in the
legal sense. If wc are to understand rightly the story of the
King’s Highway, we must think of it, right through English
history down to the eighteenth c(uitury, not as a metalled carriage-
way, but as a route for public passage in a definite direction,
of indefinite width, liowever, with a legal right for passengers, if
the road were “fonndrous,” to diverge from it Cven to the extent
of “going upon the corn ” ; a route which crossed rivers mainly by
fords, and only occasionally by bridges ; and a route intended, not
for wheeled vehicles, ))ut for pedestrians, horses, and other
animals. The famous trivoda necessitas, which imposed upon
the landowner in feudal times the obligation to maintain the road,
was not an obligation to put down a tarred macadam surface with
a steam-roller, but merely to cut the brushwood and stub the
stumps that impeded free passage.

1918] WBBB ; ENGLISH LOCAL GOVERNMENT 229

The story of the King’s Highway develops along two'^parallel
lines, the one regarding the physical entity of the road, the other
the legal, financial and administrative machinery for its main-
tenance and repair. To deal with the physical side first, the
startling thing about it is to find how exceedingly modern
is the modern road. In 1736 Lord Hervey wrote from Kensington
that “the road between this place and London is grown so
infamously bad that we live here in the same solitude as we
should do, if cast on a rock in the middle of the ocean, and all the
Londoners tell us that there is between them and us an impass-
able gulf of mud.” And even forty years later, on the great main
roads of the country, Arthur Young’s Journeys records defects
such as “rutts, which I actually measured, four feet deep, floating
with mud only from a wet summer ; what therefore must it be
after a winter?” He describes the turnpike to Newcastle as “a
paved causeway, as narrow as can be conceived, and cut into
perpetual holes, some of them two feet deep. ... I must in
general advise all who travel on any business but absolute neces-
sity to avoid any journey further north than Newcastle.” This
latter road was, be it observed, a turnpike ! Mr. and Mrs. Webb
give abundant reasons for dispelling the common belief that a
turnpike road meant a good road. Much of the money collected
by the Turnpike Trusts was wasted in process of collection,
and much of wrhat remained was either muddled away or actually
embezzled. The turnpike roads never amounted to more than
25 per cent, of the total. But bad as these w^ere, the parish roads
were even worse. As for the central Government, it did prac-
tically nothing. Telford’s Holyhead road is the one con-
spicuous exception ; though in Scotland General Wade did build
roads on a considerable scale, the landowners, it is interesting to
note, paying half the cost.

Physical and administrative considerations are alike involved
in the century-long struggle which even yet is not terminated :
whether the road should be made to suit the traffic, or the traffic
should be restricted to suit the road. The London Borough
Councils, who desire to prohibit motor omnibuses because their
roads are not strong enough to bear them, have their prototype
in James 1. forbidding “any four wheeled vehicles, or the carriage
of more than one ton of goods at a time, as the vehicles bearing
‘ excessive burdens ’ so galled the highw’ays, and the very founda-
tions of bridges, that they were public nuisances.” Act after Act
regulates the number of horses to a vehicle, the width and height
of the wheels, *tbe^ minimum size of tyres — even to nineteen
No. 90 — ^VOL. xxiii." R

930 THE ECONOMIC JOtJENAli [JUNE

inches iii J^readth— the spacing from front to back wheels, and so
on, and so on. The introduction of stage coaches was met with
a passionate protest that their use 'would enervate the hardy breed
of horsemen. The introduction of haclmey coaches into London
wits objected to as an unwarranted invasion of the secular rights
of the watermen. Hardly had the coaches secured their footing
than there fell upon them the “calamity of railways,” which in
their turn were to ruin the fox covers, put a stop to the breeding
of horses, and bankrupt the Turnpike Trusts. Then came the
bicyclist, and the country police promptly prosecuted him for
“scorching,” while the country gentleman denounced him as a
“cad on castors.” The kaleidoscope shifts, and we find the rail-
ways complaining of the competition of motor cars on the open
roads, and trarncars in the streets of the great towns and their
suburbs. And so we come down to to-day, with the municipal
tramway protesting against the competition of the company’s
motor bus. And perhaps the aeroplane will supersede the motor
bus. And then at length the road question will be at rest.

To turn to the administrative side. The history of turnpikes
extends over a little more than two centuries. It began with a
toll gate on the Great North road at Wadesmill, in Herts, under
an Act of 1663 ; and it practically ends with the Local Govern-
ment Act of 1888. But the bulk of the Turnpike Trusts — there
were over 1,100 of them in all — were created in the latter half
of the eighteenth century, and the early days of the nineteenth.
They were essentially a makeshift, and to expect their success
was to expect the impossible. Their constitution was prepos-
terous. All the local somebodies — fifty or a hundred in number —
were nominated under the Special Act as Trustees, and the great
bulk of them never attended. They kept no proper form of
accounts, and were responsible to nobody. They could afford
to pay for a competent surveyor, even had such men existed.
They were at constant war with the inhabitants of their districts,
from whom they often exacted exorbitant tolls for passage over a
few hundred yards of road. Gradually they came to hand over
their functions to contractors, who farmed the tolls for hundreds
or even thousands of miles of turnpike. The contractors made
fortunes. But the road maintenance was scamped; and those
who had lent money to th^ Trusts not infrequently lost it. The
road users complained that for the maximum of payment — the
toll revenue at one time amounted to one and a half millions per
annum — they obtained the minimum of benefit. Only where,
near the Metropolis, or round some great local centre, such as

1913] WBBB: Mmtisn wvbenmbbt* 281

Bristol or Exeter, a single fcust succeeded in absorbing its
smaller neighbours, and establishing an undertaking big enough
to employ a competent surveyor-even the great Macadam
himself, or his less-known son — were the results satisfactory.

The Turnpike Trusts had at least one advantage over the
Common Law road authority, the Parish, in the fact that they
could not be indicted for neglect of duty. Down to our own times,
the Common Law has placed upon the Parish the obligation to
maintain its roads. And if the Parish did not do its duty it was
indicted and convicted with all due process of law, not uncon-
nected with very considerable expense, at the Assizes. And,
apart from the grotesque unfairness of requiring a hamlet on the
route from Dover or Southampton to London to m«ointain the
route for the great through traffic between these ports and the
Metropolis, the Parish had no machinery for carrying out its legal
duties. For centuries it could not levy a rate.* The inhabitants
were bound to give their personal services. Of course, an extra
legal system of commutation sprang up; and influential persons
who could best afford to pay got off cheapest. And, equally of
course, the roads 'were inadequately maintained. Puts, when
they got more than four feet deep, were ploughed over — this
method is being recommended as a modern improvement on the
“ dirt ” roads of America to-day — or a cartload of stones was thrown
into some exceptionally “foundrous*’ place. Naturally, the
farnlers did not see why they should make, at their own cost,
roads, better than they needed themselves, for the sake of out-
siders. At length statute labour died out, and the highway rate
took its place. But it was reserved for our own generation to
sink the Parish in a wider area, and to hand over the maintenance
of roads to the Union and the District Council, and even, though
in a degree varying widely from county to county, to the
County itself. Doubtless this process of “maining,'' as it is
technically called, will be carried further in the immediate future.

But even this is not the end. The whole cost of road main-
tenance — subject to existing grants-in-aid from the central
Government-^now falls upon the owners and occupiers of real
property. And if it be admitted that even now road users as such
get off too lightly in comparison with owners of real property,
and that with the rapid grow^th of motor traffic this is likely to be
still more the case in future, some readjustment must be made.
One school of reformers would follow the French example, and
transform the great main roads of the country into routes
nationales. The other school, to which, as might be expected,

B 2

232

THE ECONOMIC JOUBNAL

(JUNE

Mr. arid Mrs. Webb declare their adhesion, believe in central
control and supervision, resting on the basis of central grants-in-
aid on a generous scale.

The suggestions which Mr. and Mrs. Webb make for future
legislation are on quite a modest scale. They think that some
exceptional contribution towards the cost of highway maintenance
should be levied on the owners of vehicles of an exceptional
character. Probably the motor omnibus and the heavy com-
mercial motor would both fall within this description, and perhaps
also fast motor cars in excess of a certain weight. They suggest
that grants from the Eoad Board should be available for the
maintenance as well as the improvement of highways (either
already “mained” or which should be “mained”) maintained by
County or County Borough Councils and the Councils of Boroughs
and Urban Districts having more than 20,000 population, and that
grants in aid of maintenance of important roads, “perhaps equal to
20 per cent, of the actual annual expenditure,” should be made, the
requisite funds being partly provided by means of a reasonable
increase in licence duties and motor-spirit duties. This proposal,
if it is meant to include the existing grants in aid. would hardly
commend itself to highway authorities as adequate, as it would in
many cases reduce the State aid now given to County Councils
for their main -road expenditure. They suggest also that minor
highway authorities should have power “voluntarily to cede their
road administration to County Councils.” But this power already
exists under the Local Government Act, 1888, though it is largely
ineffective, partly because the minor authorities are not willing
to give up their power to keep the maintenance in their own
hands, partly because a district road before being handed over to
a County Council must be placed by the District Council “in
proper repair and condition to the satisfaction of the County
Council,” and partly because County Councils are not under any
obligation to “main” roads, and in most Counties are unwilling
to do so. The suggestions of the authors are all in the right
direction, but probably no satisfactory solution of ihe road problem
will be reached until the promised readjustment of local and
imperial taxation has been effected and a proper classification of
roads has been made based on the character and amount of the
traffic using them.

The road that Mr. and Mrs. Webb have led us has been long
and devious, perhaps even occasionally “foundrous.” But the
ramble has been most interesting throughout. Perhaps in a
second edition the authors will help us to answer a most interest-

1918] PROTHBKO: BNOLISH FABMIKG PAST AND PRESENT 238

ing question which they leave untouched : How during the latter
part of the last century the farmers, recalcitrant all the time
against unnecessary expenditure, yet came to transform the bye
roads from the mere tracks, which apparently they were not
more than two generations back, into excellent macadamised
roads as we see them to-day.

George S, Gibb
W. M. Acworth

English Farming Past and Present. By Rowland E. Prothero.

(London : Longmans, Green. 1912. Pp. 504.)

We have read books on English agriculture by the dozen :
books by German professors and French doctors, by politicians,
students in research and apologists for this view or that ; anl we
have generally laid them down with the feeling* that these people,
honest folk, no doubt, and often learned, do not understand our
English agriculture and do not know our English countryside.
Mr. Prothero is none of these. He combines the scholarship of
Oxford with the insight that is born of business contact with the
economy of agriculture. We can do no more than pick out some
of the main threads of his comprehensive work, leaving to the
masterly art of the author their combination in picturesque and
yet solid narrative.

Mr. Prothero’s critique of contemporary agricultural literature
makes three things abundantly plain. The first is the fact of
our constant indebtedness to the foreigner, a debt which in the
nineteenth century we amply repaid. In the seventeenth century
Samuel Hartlib (who, like Richard Arkwright, was something of
a pirate), after noting the inferiority of English cheeses to those
of Italy, France, and Holland, reproaches the English husbandman
for his insularity. Sir Richard Weston (Circ. 1650) calls attention
to the Flemish custom, unknown to him in England, of taking a
farm “upon improvement,” on the basis of a twenty-one years’
lease, which provided that “whatsoever indifferent persons . . .
should judg the farm to bee improved at the end of his Leas, the
Owner was to paie so much in value to the Tenant for his improv-
ing it ” (p. 113). England arrived at this in 1883. It was by the
skill of Vermuyden and his Dutchmen that the fens were drained
in the days of the Commonwealth. The Inquisition drove valu-
able brains to England. Jethro Tull, who invented the first
practical drill, had been impressed during his foreign travels “with
the cultivation of vineyards in the south of France, where fre-

234 THE BCOKOMiC JOUB^fAL ^ “ [JITHE

qu6nt jpiloughings between parallel rows of vines not only cleared
th6 land, but worked and stirred the food-beds of the plants until
the vintage approached maturity” (p. 171). In the seventeenth
century foreign breeds of horses were extensively imported : “so
great was the admixture of blood that Bradley, writing in 1727,
thinks the true bred English horse hardly exists” (p. 183).
Weston, a refugee in Flanders during the Civil War, brought back
the turnip, and was therefore accounted by Arthur Young “a
greater benefactor than Newton” (p. 107). From the same
country came the onion, the cabbage, and the potato. Neither
men nor ideas nor capital were in those days immobile as between
the nations.

In the second place, the progress of agricultural knowledge
was "uneven. Tusser and Fitzherbert carried agricultural science
but a very little way further than Walter of Henley, the didactic
steward of the manorial economy. What was new was their
record of the social changes which were fast dissolving the frosted
patchw^ork of English feudalism. Even in 16f51 Hartlib offers the
following prescription against the Rot : “Take serpents or (which
is better) vipers, cut their heads and tayla off and dry the rest to
powder. Mingle this powder with salt, and give a few^ grains of
it so mingled now and then to your Horses and Sheep” (p. 111).
But from Tull onwards there is no break in the progress of agri-
cultural knowledge, in peace or in war (for Napoleon never got to
England), in fine weather or in wet, in the halcyon days oi high
farming or through the grim economies force.d on the last genera-
tion by the strain of American competition. One by one the
natural sciences are placing the wealth of their discoveries at the
service of agriciiltnre. This continued and continuing progress
of knowledge is a fact which might be remembered by theorists
when they formulate a law or statement of tendencies in
agriculture.

The third j)oint is a simple fact of human nature, or illustra-
tion of the Law of the Division of Labour. “Albeit,” says the
Doctor in the Discourse on the Common Weal, “we labour not
much with oure bodies as youe say, yet youe knowe we labour
with oure myndes, more to the weaknynge of the same than by
anie other bodily exercise we can doe. ...” Truly study weakens
the mind. Lecturers in Political Economy make poor directors
of companies. Thomas Tusser, Richard Weston, Robert Bake-
well, Arthur Young, all failed as practical farmers. Exception-
ally, Ricardo made a fortune on the Stock Exchange, and then
wrote good Political Economy.

1913] l^BOTOBBO : maum FABMtNG PASX AKB PBBSBKa? 236

Politics, economics, sociology (if there be such a thing), and
law meet in the history of land tenure. In Chapter 2, ‘*The
Break-up of the Manor**; Chapter 3, “Farming for Profit**;
Chapter 14, “The Eural Population’’ ; Chapter 16, ♦Tithes’* (a
most valuable contribution in an obscure field) ; Chapter 19,
“Conclusions,” Mr. Prothero gives us in kaleidoscope the history
of a little verb tenet e, to hold. We should like here to ask him three
questions for possible notice in the second edition which this book
will doubtless soon reach. “For the first 140 years of the period
(1189-1417), the lords of Berkeley steadily pursued the plan of
converting customary tenancies and tenancies of newly enclosed
lands into freehold of inheritance at fixed quit-rents which repre-
sented the rack-rents then current. . . . This family policy was,
however, completely reversed by . . . Thomas, third Lord
Berkeley (1326-61). Many hundreds of the freeholds created by
his predecessors were repurchased and let at rack-rents” (p. 45).
What exactly were these freeholds of inheritance? Challis, Real
Property (p, 3), says “ancient quit-rents, which affect freehold
lands held for a fee simple and are undoubted incidents of their
tenure, still exist ; but in practice these must be at least as old
as the year 1290, in which year the statute of Qma Emptores
made it thenceforward impossible for a subject to reserve
a rent as incident to tenure only.” Were there special
circumstances which enabled the lords of Berkeley to create
freeholds at quit-rents during the forty years after 1289?
The second question is : How important were cottagers
in mediaeval times ; are they in any sense the lineal an-
cestors of the modern labourer? “Beside the villeins, there
were other orders of bondmen — such as . . . the bordars and
cottars” (p. 22). “Cottagers, says Kent, vho live at the sides
of the common, generally neglect the advantage they have before
them” (p. 305). A gap of six centuries separates these two
quotations, and the cottager is not indexed elsewhere. The study
of the manorial surveys seems to reveal little about them. Some
cottagers are mentioned among the freeholders and some among
the copyholders. Is it true that the class of cottager is irrelevant
for purposes of law and even of rural economy, the great divisions
being on the one hand between freeholders, leaseholders, and copy-^
holders of different grades, and on the other hand between
farmers and the employees of farmers, whether farm servants
or labourers in the parish or labourers from outside? And
again, after following up freeholds (not freeholders) to p. 150
we are then instructed to see Landowners, Turning for prefer-

236 THE ECONOMIC JOUENAL [JUNE

ence to Yeomen, we read at the end of an instructive note (p. 296,
note. 4) : “The definite restriction of the word to farmer-owners
is a comparatively modern usage belonging to the nineteenth
century. %e Dictionary of Political Economy, s.v. Yeoman.**
Again exercising the liberty of a critic we turn rather to Sir
Thomas Smith, De Republica Anglorum (1566), who says
(Lib. I. c. 23) that yeoman means one who “is a freeman borne
English and may dispens of his owne free lande in yerely revenue
to the summe of xls sterling.*’ Now one remembers as a boy
how quaintly the Reform Act of 1832 read : “In the counties
the franchise hitherf-o confined to 40.9. freeholders was given to
IJIO copyholders and £50 leaseholders.” Why, one asked, this
discrimination? Why, when men were buying and selling 405.
freeholds, did not the reforming Parliament extend the franchise
to 405. copyholders and £10 leaseholders? Is the explanation
possibly this, that economic change from the sixteenth century
onwards led to the emergence of so many people of the yeoman
type, yet without the yeoman’s freehold, that they had perforce to
be allowed the name? Latimer’s father, as Mr. Prothero reminds
us, was a yeoman, but had no land of his own (p. 296, note 4). In
1832 Parliament tried to get level with the new situation, which
was only four centuries old. That done, the yeoman could be
restored to his original denomination, an occupying owner.

One supreme question overshadows every other in English
agriculture, the question of Enclosure. Its literature grows
yearly. Within the last two years we have had the impassioned
protest of Mr. and Mrs. Hammond, the exact scholarship of
Professor Gonner, the lively and inspiring research of Mr.
Tawney. Mr. Prothero ’s verdict is that of a sympathetic judge
versed in the economy of agriculture, with the cases of the
county reporters at his finger’s end. “It has been suggested,”
says he, “on the authority of passages in his tract on wastes, that
Arthur Young learned to deplore his previous crusade against
village farms, when he saw the effect of enclosures on rural life.
What Young deplored was the loss of a golden opportunity for
attaching land to the home of the cottager. But he never faltered
in his conviction of the necessity of breaking up the opeuf fields
and dividing the commons” (p. 215). And again, “The divorce
"tof the peasantry from the soil, and the extinction of commoners,
open-field farmers, and eventually of small freeholders, was the
heavy price which the nation paid for the supply of bread ai^d
meat to its manufacturing population ” (p. 149).

The Corn Laws are now of historical interest only, the only

1913] PROTHBBO : ENGLISH BABMINQ PAST AND PRESENT 237

possible connection with modern times being furnished by the
tradition of Imperial Preference, which, as Mr. Prothero observes
(p. 273), was present in all the Corn Laws from 1791 onwards.
Treating of their growth in England, our author says : “In 1670
the com laws became more frankly protective” (p. 143). Seeing
that to the end of the eighteenth century England was a wheat
exporter, and that on occasions of scarcity the import duties, like
the export bounties, were suspended — e.g., in 1698, 1709, 1741,
1757-9 — “protective” seems an unsuitable word. The import
duties of 1670 were quite secondary to the regulation of exports
in this period. “Fostering” was nearer their intention. Only
after 1815 were the Corn liaws frankly protective, and that fact
killed them in 1846. Of the Corn Bounty, Mr. Prothero writes
p. 259) : “In the reign of William and Mary an addition was
made to the system ” — to wit, a bounty of 5^. per quarter on
home-grown wheat exported. This is not quite accurate. For,
as an American writer, Mr. Gras, has shown, the first Com
Bounty lies buried in a money grant of 1673, ami in 1683 John
Houghton estimated that in all about €70,000 yearly was needed
for the payment of corn export, premiums. Its existence was not
unknown to the Parliamentarians of the early nineteenth century.
The Eeport from the Select ('ornmittee on the Agriculture of the
United Kingdom, 1821 (p. 18), speaks of the bounty policy:
“which, more desultory in its operation and more frequently inter-
rupted by arbitrary interference, prevailed under the Princes of
the House of Stuart.” Speculations, therefore, as to the design
of the Whigs in introducing this policy in J689 require revision.

“The limit of home prices, at which the imjX)rtation of grain
was allowed at nominal duties, was raised in the case of wheat
from 48.<?. in 1773 to 85.9. in 1815. Below those limits, duties, so
heavy as to be practically prohibitive, were levied on imported
corn” (p. 273). 85 is a misprint for 80 (the figure being

correctly given in Appendix 111, on the Corn Law^s, which con-
tains also an account of the Assize of Bread). Moreover, there is
a distinction between the Acts of 1773 and 1815. That of 1815
was not prohibitive, it was a prohibition. When the ports were
closed no com could come in, and there was no revenue at all.
This was a breach in Corn Law tradition. When Eobinson pro-
pp^^d it for the first time in the third draft of the measure which
became the law of 1815, Alexander Baring, the member for
Taunton, suggested that the Government proposed prohibition
rather than a graduated duty, in order to catch at a little popu-
larity, lest the idea of a duty upon corn should excite an outcry

288 THB BOONOMIO JOXJENAIi [jtJNB

(Hansard, XXX., 70), Robinson denied it, but gave nd alterna-
tive e:i|:planation. Mr. Prothero next refers to the encjouragement
which the sticky sliding scale of 1828 gave to com speculators,
having in view, no doubt, Mr. David Salomons’ pamphlet on the
subject, and concludes: “Yet in spite of this experience the
graduated system was maintained in the legislation of 1842 and
1845” (p. 273). But surely, if the Act of 1828 was sticky, that
of 1815 was stickier still, and encouraged still further the holding
up of supplies until free entry was obtained at the no-duty point.
Peel’s sliding scale, by its lower range and slighter changes,
removed, and was designed to remove, the weaknesses of the scale
of 1828.

It is something of a joke against economic historians that they
expire about 1820, and in their death-song announce the consum-
mation of the Industrial Bevolution. To an economist Chapters 17
to 19 of Mr. Prothero’s book are the most interesting of all, being
full of new and recent matter. If so far we have been pacing through
the centuries, now we begin to gallop. Change succeeds change.
Depression is followed by prosperity, which is again followed by
depression, which, in its turn, is painfully surmounted. Methods,
markets, persons are challenged and reformed : the old gives place
to the new. On this note we could wish to end, but there are
two sentences in the conclusions (in which the author favours a
peasant proprietary for England) which seem to ask for criticism.
“The Small Holdings Act has provided a certain quantity of land.
But its methods are so faulty that its operations are necessarily
limited” (p. 415). Does none of the fault lie with landlords?
We who belong to colleges in Oxford and Cambridge know some-
thing of the average landlord’s feelings on the subject, and the
farmer — who is the only person with a good cause lor grumbling
— has expressed his. If small holdings are to be discussed, they
deserve a chapter to themselves, including, for example, an
account of the successes that are being won in Cambridgeshire,
as well as a criticism of the difiQculties that are being experienced
in some other parts. We could wish, too, to delete the last
sentence of the book. “For the purpose of this enquiry” — Mr.
Prothero is referring to the ascertainment of the bare unimproved
value of agricultural land — “the Valuation now in progress would
be only a costly farce if it were not also a serious injustice ” (p.
418 ).

Injustice! The word brings us back to the tragedy which
we had almost forgotten in our admiration of the gallant
resistance made by British farmers during the recent prolonged

191^1 iiBAJ* : TEOY, A mvnr m homekic geogkapht 289

depression. How many copyholders and poor commoners
must have gone to their graves with' this word on their lips !
WAs not injustice most unjust when — as now — ^the law was on
its side, when there was no longer a Court of Star Chamber to sit
with unconstitutional promptness on encroaching landlords?
A Parliament of landlords turned the argument from justice to
necessity, and declared a peasant proprietary to be economically
incapable of catering for an industrial England, but what shadow
of a chance did it give to the peasants to try their hand ? Are we to
condemn the customary tenants for blindly resisting enclosures
in the eighteenth century (in the fourteenth and fifteenth they often
practised it among themselves) when enclosure meant exile or
degradation? For what with doubtful titles and Hwyers' fees,
bills for quickset and new roads, enclosure meant to the small man
nothing less than this. Sheep are good things, and turnips are
good things, and both are better than foxes;* but men are oetter
than them all. If Coke saved England by the ploughshare, why
might he not have saved it v ith the ploughshares of an organised
peasantry? Or was the yeoman of Elizabethan England a myth,
and was his representative at the Beginning of tlie nineteenth
century incapable of the things wliich the Danish peasants did
half a century later, w^hen they made themselves expert and
specialised farmers, supplying the industrial population of
England, Danish law and Danish Government assisting? But we
are ourselves in danger of gliding into exaggeration , like Macaulay
in his caricature of the English country squire. For there have
been, and still are, many just and generous landlords in England.
Times, however, are changing. Mr. Prothero pleads for a peasant
proprietary. We echo his desire. Only the landlords of England
can restore to sure success the peasantry they once dethroned.
This restoration is the biggest call that England has ever made
on the chivalry of her erstwhile rulers.

C. B. Fay

Troy: A Study in Homeric Geography, By Walter Leaf,
Litt.D. (Macmillan and Co.)

The modern fashion of seeking for economic causes has led
Mr. Leaf to write a very interesting book. Why was Troy so
rich and important? M. Berard’s answer is well known. In
early times navigation by sea was difficult and dangerous ; con-
sequently it was easier to carry goods over an isthmus than to
round a promontory. Those who could hold the isthmus could

240 THE ECONOMIC JOtJBNAL [jUNE

levy toll. Mycenae, rich in gold, is the most obvious illustration of
the ^isthmus law.” M. B^rard applied this law to Troy; but
Troy is not on an isthmus ; could it ever have been worth while
to carry over from Besika Bay to the Hellespont? Mr. Leaf’s
theory, which is suggested by M. B^rard’s, is, briefly, as follows :
A current runs down the Hellespont from east to west. During
the greater part of the year there are strong winds from the
north or north-east ; consequently small ships are often detained
off the entrance to the Hellespont for a considerable period of
time. Ancient ships, with jars (not galvanised iron tanks) could
not carry much water. Therefore ships from Greece going to
the Black Sea must get water at the entrance to the Hellespont
to sustain their crews during the enforced delay. The only place
where this can be done is at the mouth of the Scamander. Thus
they who can hold the mouth of the Scamander can effectually
block the Hellespont. This is what, in Mr. Leaf’s view, the
Trojans did, and prevented direct trade between Greece and the
Black Sea ports. The result was an annual fair at Troy (King
Priam taking heavy tolls) : to this fair came traders along four
well-marked trade routes, whicli are faithfully represented in the
catalogue of the Trojan allies. At last the Greeks got tired of
paying tolls and combined to smash the moflopoly. These trade
routes are as follows : First, by land from Europe north-west of
Troy, from the river Axios through Thrace to the Hellespont;
second, by sea from the ports on the south shore of the Black
Sea ; third, by land from Phrygia and Mysia ; fourth, by sea from
Lycia — probably to Assos in the southern Troad on the gulf of
Adramyttium and then overland to Troy. Mr. Leaf traces these
routes with learning and ingenuity, though it seems possible that
the Pelasgians (Mr. Ijeaf has a separate chapter on these puzzling
folk) from Larisa may have been allies from the Thracian route ;
but that question cannot be discussed here. If, then, Mr. Leaf
is correct, we have four trade routes converging at Troy, apart
from the trade from Greece, The excavations at Hissarlik have
established a series of cities or fortresses on the same site ; the
sixth of these cities, with its great Mycensoan walls, is clearly
Homer’s Troy. But the earlier cities were also rich. Dr.
Schliemann’s gold treasure probably came from the second.
After Homeric Troy, the town is never important except as a
tourist resort (Alexander of Macedon and Julian the apostate were
two of the tourists who visited post-Homeric Troy). A success-
ful theory has to explain why Troy was of great importance in
the second millennium b.c., but never afterwards. This is the

1913] b5hm bawebk kapital und kapitalzins 241

problem, and it is only fair to state Mr. Leaf’s summary of his
solution in his own words

“We see now why it was that Troy never recovered from its
capture by the Achaians. ... It was not the capture, but Greek
colonisation, which destroyed Troy. It had one merit only — that
it could block the Hellespont to the west. As soon as the west
had taken possession of both shores of the Hellespont, Troy was
for practical purposes useless.”

But, it may be asked, could not Trojans still have continued
to levy toll on the Black Sea trade, just as till recent times the
Danes at Elsinore levied toll on the Baltic trade? And why did
not the Black Sea trader wish to trade direct to Greece? If so,
he should have helped the Greeks, and not the Trojans. And
was Greece always so united that it would not have paid some
later Priam (before the era of moderately large ships wdth many
oars) to start the blackmailing business agaip? Also, it cDuld
not matter much to the Thracians, who brougl\t their wares to
the Hellespont, whether they found Greeks or Trojans there so
long as there was a good market. Yet Thracians fight for the
Trojans, They may have been mercenaries, but what is the
evidence that they were? These observations are only intended
to indicate that the argument, as it stands, is too compressed.
The main contention seems to be sound. The excessive wealth
of Troy can hardly have been due to anything but blackmail —
that is, the possession of some advantage of a monopolistic kind
which enables the possessor to exact tolls far in excess of the
services rendered. Such has probably at all times been the most
potent method of acquiring great wealth. The power of causing
great inconvenience is commonly more valuable than the power
of rendering important services.

The book does not deal solely with economic causes and trade
routes, but the other problems of great interest which Mr. Leaf
attacks are not of a kind which would necessarily interest readers
of this Journal. Except for one most unfortunate phrase on p. 2,
this book is not marred by the uDfairne>ss and rudeness which are
too common amongst scholars when they discuss Homeric
problems. C. P. Sanger

Kapital und Kapitalzins : Positive Theorie dcs Kapitales. Dritte
Auflage. Zweiter Halbband. Professor und Einanz-Minister
E. VON Bohm Bawrrk. (Innsbruck : Wagner. 1912.)

This work on Capital and Interest has long been beyond need
of laudations, in noticing Part II. of the new edition of the

242 THB ECONOMIC JOtJENAL [JXJNB

constructive part of it, we deal simply with the various changes
an(J supplements that have been made by the author after more
than twenty years’ endurance of European and American
criticism. From stress of official duties he was unable to make
alterations in the second edition (1902) ; but in due time he has
found leisure to do justice to himself and work vengeance on Jiis
opponents in the third edition. Part I. of it appeared in 1909.
Part II, is now before us.^

The author has all his old energy. He seems to have mastered
all that has been written directly, or even indirectly, bearing on
his chosen subject. The articles and pamphlets and books
thereon turned out by the Press of Europe and America year after
year since 1889 (the date of his first edition) form a vast pile ;
and he has read it all and taken the heart out of it. Everything
of interest and value on Interest and Value seems to be known
to him. This makes the present book in its two parts not only
the statement and defence of his own theory, but a history and
digest of a great part of recent economic literature. Pie himself
disclaims^ approach to exhaustive history, and will have it that
he has only dealt fully with a chosen few of the writings and
authors. But his ideal of exhaustiveness is a very high one. He
knows, indeed, that many will find it much too high, and he
warns the general reader away from his “Excursus” as a food
he cannot be expected to enjoy. Perhaps the Excursus will have
the more delicious taste for the critics wffio find their own measure
meted out'to them again there without stint.

The text of the wdiole book (Parts I. and II. conjoined), as
distinguished from the Excursus, has undergone four chief
changes. The references to recent writings have distended the
third section of Book 1 . to twice its original size ; it is the section
on conflicting definitions of capital (Sireit um den Kapitals-
hegriff), A new section® appears in Book II. on “An important
parallel to the roundabout w^ay of production by capital.” The
parallel is found in the improvements increasing the utility and
lengthening the life of durable goods (like boots or houses), im-
provements involving greater outlay than before but with clear
physical (or “technical”) advantage and (under suitable condi-
tions of the rate of interest) wdth economic also. The analogy,
however, is not perfect.

1 Notices in this Journal of recent publications of the author appeared in
June, 1900, Strittige Fragen ; March, 1901, Kapital und Kapitalgins~-~Oeschichte
und Kritikf 2nd ed. ; September, 1904, Zinsliteratur in dtr Qegenwart ; December,
1910, KctpiUil und KapUalzins — Positive Theorie, Srd ed. , Part 1.

® Preface to Srd ed. , pp. xi, xv ; cf. xiii.

• Section II., pp. 162-171.

1918] b6sm bawb»k: kapitab tod kapitalzins

243

The foregoing changes are in Part I. The others are in
Part II. There is a new subsection (ix.) of Book III., Section L,
devoted to a summary (Zusammenfassung) , and there is a PiSy-
chological Postscript (Psychologisches Nachwort), Subsection x.,
ibid.), both in connection with the theory of value. The fifth
change is one of arrangement ; all the sections on value are now
in one Book, the third.

The summary is a careful re-statement of the cardinal prin-
ciple of Final Utility, on which the whole edifice depends, and a
classification of goods so estimated. The author declines to admit
Final Disutility as a ground of separate classification (p. 310).

He admits that in a minority of ca.^es the negative feature
appears, and then the value of goods is estimaleu not by their
positive contribution to welfare but by their aid in defeating
harm. Some would say, the majority includes the cases w^here
the goods bring pleasure, the minority wheie they prevent pain.
But our author is careful to explain in this and the following
section (the Psychological Postscript) that, if the phrases “plea-
sure** and “pain** are thought to commit him to Hedonism, he
will have none of them. The Postscript seems very judicious. Many
of ns, at least, will agree that to bring psychological discussions
into economics is to introduce disturbing elements there {star end e
Fremdkdrper) (p. 327).

Nevertheless, in Excursus x and xi. Professoi Bohm Bawerk
goes into some detail over psychology, in the tenth dealing almost
entirely with Professor C)uhel and the quantitative measurableness
of feelings ; in the eleventh with Bentham and tJevons on future
wants, “present anticipated feelings,** as entering into estimates
of present value. He leaves the exact influence of them an oiien
question (p. 325;, a happy hunting-ground for the psychologists,
who are not agreed among themselves on the matter. He says in
effect ; “If I am told that as an economist I ought not to have
raised the question at all, but relied on the ruling doctrine of the
professional psychologists, 1 must reply that, alas! there is no
ruling doctrine’* (p. 326). Yet he sees we must have a working
theory if, for example, we are to discuss such a motive as provi-
sion for the future. Lujo Brentano, who frankly calls this motive
an exception, sui generis, ranking it as an actual present need
(p. 330), is handled with unusual acrimony. The discussion of a
kindred subject. Disutility, in Excursus ix , iiroceeds under a
drier light. It is a very pretty quarrel. Jevons and Gossen had
both remarked that stage by stage the pain of exertion tends to be
greater than the pleasure of reward, and the workman, if free to
do it, will stop just at the point whore the utility and disutility,

244 THE BOOHOMIC JOUENAL [JXJKE

the pleasure and the pain, balance one another. It is not Jevons,
howeyer, but Professor Edgeworth who introduces disutility
broadly as a co-ordinate factor in the normal determination of
value. Professor J. B. Clark would go even farther, and make
it the predominant partner. But Professor Edgeworth avoids
this extreme, and is even careful to except from co-ordination
the cases where the workman is not free to stop, and labour is
therefore not a variable. He remarks at the same time on the
liberty of the labourer to change his calling if too disagreeable,
and his power to stop when he pleases at piecework ; and he holds
that invariableness is a feature, not of the majority, but of the
minority of cases. “The desire of diminishing disutility is one of
the motives which bring about economic equilibrium.” Still, he
allow^s that the “disutility” is not the vulgar “cost of produc-
tion”; and Professor Bohm Bawerk, with some reason, claims
him as practically .admitting that value does not correspond to the
effort and sacrifice involved in production, when he admits that
articles freely produced, in the conventional sense, are produced
at fixed wages and in fixed hours of labour, where no “disutility ”
can come in at all. The w^hole question betw^een the two
economists is thus about the estimate of a quantity “not susceptible
of exact measurement.” ^ Professor Edgeworth is one of the
critics who fare best in the conflict as a whole. He had made an
impression on the text of the third book - by bringing out the
drawbacks of typical examples (like horses) that are^ indivisible
goods, and the advantage of those (like corn) that admit of “nicely
calculated less and more.”

The debate on Disutility, however, was an affair of outposts
when compared with the battle in Excursus viii. over the relation
of Cost and Value. Though our author admits that Jevons spoke
too absolutely when he said, “Value depends entirely upon
utility. The value of the labour must be determined by the
value of the produce, not the value of the produce by that of the
labour,” it was substantially the very position that he himself
maintains in this Excursus against Professor Marshall and Pro-
fessor Schumpeter. The Excursus (vii.) on the theory of the
value of “Complementary Goods” is more nearly a dis-
cussion among friends, Professor Wieser receiving the largest
share of the criticism. Our author points out the danger of

1 Prof. Edgeworth in Economic Joutinajl, December, 1894, p. 724 ; cf. Sep-
iember, 1894, pp. 618-521, and 719-724.

* Section II., pp. 382-388 (3rd. od.), See Economic Jouenal, June, 1892, pp. 333,
334.

245

1913 ] BOHM BAWBBK: K4P1TAL UND KAPITALZINS

treating the alternatives, in an estimate of final utility, cumu-
latively, as if to be arithmetically added together (pp, 18&~190),

Eeadere of the first part of this third edition had already
encountered in its Excursus (i. to v.) discussions akin to those
that now meet us in Part II. in the formidable twelfth Excursus
of nearly one hundred pages on the relation of Professor Bohm
Bawerk’s third reason for the different estimates of the value of
present and future goods to the other two. The third was “the
technical superiority of present goods over future “ as means of
production. Facing the inevitable risks of every attempt to put
such a case in a nut-shell, we may put our author’s view as
follows : — The long way of production brings, as a physical
result, a greater quantity of goods (it may be with a less value
per unit, but with a larger sum-total of values; to him who adopts
the long way now instead of procrastinating. Is a regard to this
physical result to be taken as a distinct and third reason? Our
author says : “Yes, to get more is not the same reason as to get
sooner'^ (400 note). The first two reasons were : 0) the pre-
sumable difference between our wants of to-day, togeiher with
the means of providing for them to-day, and our wants of the
future with the means of provision then; (2) the general lii:uian
tendency to make light of the future. As it is Professor Bohm
Bawerk’s view that, if the productiveness of the longer way
ceased to exist, the phenomenon of Interest would cease to be of
much account (pp. 341, 400), he could hardly be expected to
surrender even to such opponents as Professor Irving Fisher and
Bortkievicz, who deny the existence of the “technical superiority “
and say the third reason depends on the other two. He presses
them hard, and it will not be easy for them to meet some of his
arguments. '

Excursus xiii., the last but one of a controversial nature,
relates to the attitude taken by Professor Cassel and Dr. Landry
towards the author’s view of Durable Goods as concerned with
Interest. Professor Cassel’s writings are well known in England.
Dr. Landry is one of the few French writers who have pursued the
same general direction as the Austrians, and he has already shown
himself a writer of some authority.^

It remains to be said that the last Excursus is one of the only
two of the long series that are old friends, viz., the Reply to Dr.
Robert Meyer on the “Exploitation theory of Interest,” formerly
Appendix II., now Excursus vi. (the last of Part I,), and the note

* Hia chief writings are UlntMt du capital (Giard, Paris), 1904 ; UutiliU Bociah
de la propri4t4 individuelle, 1901.

No. 90. — VOL. XXIII. S

246 THB ECONOMIC JOUJ^AL [JUNE

Oil “the Amount of the Initial Fund nqdesaary for entrance on a
pi^iod of production of definite leng^i/* formerly Appendix I.
now Excursus xiv,, and last of the wole series.

The book is a remarkable acWevement even for Professor
Bohm Bawerk. The addition to text of Dissertations on such
a large scale is probably new in/ economic literature, though not
completely unknown elsewhere/ There are 652 pages of text and
473 pages of Excursus, “a/'book within a book“ (434). The
Excursus are the most piqi/ant and novel feature. Such appen-
dices as those of Professor 'Marshall’ s “Principles “ play a different
r6le. It may be doubted if the example of the Austrian professor
will have many imitators; few, indeed, could follow his example
with much prospect of finding readers. “The book requires a
strong swimmer.” But it will be read widely and prized highly
by all serious p.cudents of economic theory.

James Bonar

Elementary Principles of Economics. By Ibving Fisher, Pro-
fessor of Political Economy in Yale University. (New
, York: The Macmillan Co. 1912. Pp. xvi + 614.)

‘ Professor Fisher does not give us in this book any fresh
matter. Almost everything it contains has appeared before in
one or other of his previous works — Nature of Capital and
Income y Theory of Value and Prices, Purchasing Power of
Money, and Rate of Interest. The present volume is little more
than a combination of the more elementary parts of those books.
This description might suggest a shapeless piece of work without
coherence or unity of purpose. But the book is not in the least
like this. It forms a perfectly organic whole ; and it is remark-
able how naturally and easily the various parts fall into their
places as integral portions of a large scheme of economic analysis.
It would seem that Professor Fisher has for many years had this
general scheme in his mind, and that he has always conceived
his other works essentially as developments of its definitely
related parts. Certainly the book is entirely free from the
ordinary faults of a compendium.

We commence, as is to be expected, with The Nature of
Capital and Income. We are familiarised with Profeasor
Fisher’s definitions of Wealth, Property, Capital, and Incotipe,
and are duly introduced to the methods of “Balances” and
“Couples,” the nature of “Interactions” and the rest. After the
“foundation-stones” are thus laid, the transition to the next part

1913] FIsksK: iBIiEMEOTABT ^EINOIPLBS OF BOONOMIOS 247

is easy. A knowledge of prices has been assumed in the discus-
sion of all the above conceptions. The determination of prices,
therefore, next demands study; and, before individual prices, the
general level of prices. The substance of the Purchasing Power
of Money is accordingly expounded at considerable length. Then
follows a brief statement of the theory of value to account for
the determination of particular prices. Next, the problem of
interest finds a natural entrance ; and the book is finished off
with a rather unsatisfactory section entitled Distribution.’*

It is only necessary to say further with regard to the matter
of the book that Professor Fisher hardly seems to justify the
claim he makes in the Preface to have avoided “controversial
matter,” Many of his arguments, notably his explanation of
Interest, acquire from compression a more rather than a less
controversial character. And the criticisms which his works have
encountered have generally been directed far more against the
fundamental notions than against the elaborate developments
which he omits from the present volume. English readers, too
— familiar with Dr. Marshall’s celebrated explanation — will
regret that Professor Fisher has retained his singularly weak
account of transitions in the price-level. He commences by
assuming without argument that an increase in the quantity of
gold “through the equation of exchange will cause a rise in
prices,” and then argues at length how that rise will provoke a
further rise, then a reacting fall, and so on in a never-ending
series ; thus showing neither how prices rise in the first instance,
nor how ultimately that rise is sustained. liut there is. no
purpose to be served in reopening here these old controversies :
and further comment must bear upon the aspect of the book
which is new, namely, its character as a whole, and its claim to
the title of a text-book on Elementary Principles of Economics,

In this regard Professor Fisher claims the test of experience.
This book has had “thorough trial for two years in the class-
rooms at Yale, under nearly a dozen different instructors.” And
these instructors “have usually become extremely enthusiastic
over its ‘ teachableness,’ although many of them had begun its
use with grave misgivings.” To confront this testimony of con-
verted- agnosticism with criticism of an a priori nature may savour
of presumption ; so it will be well to say that the teachableness
of the book is not in question. After all, any book by Professor
Fisher would be teachable. The clear-cut vigour of his style
would secure tha^, if nothing else would. And it is his style and
not any peculiar merit of his matter or method that probably

s 2

248

THB ECOKOMIO JOUBKAXi

[jtJNE

accounts for the teachableness which the Yale instructors have
discovered in the present book. Professor Fisher, indeed,
attributes it to the fact that he has followed the ‘‘pedagogical”
as opposed to the “historical” and the “logical” methods of
other economists. He claims for his method the advantage of
beginning with those topics most familiar to the students, such
as “personal pocket-money and bank accounts, household ex-
penses and income, the fortunes of the rich.” But whether the
student is interested in these topics more than in those with
which economists generally commence, whether his imagination
is really more strongly gripped by ideas upon personal pocket-
money and bank accounts than by the speculations of that
“ Kobinson Crusoe economics ” for which Professor Fisher enter-
tains such unqualified contempt is probably a question which
would have to be answered very differently of different students,
and otherwise than the author imagines of students as a whole.
Professor Fisher, indeed, seems to think of all students as being
possessed of a mathematical or even a mechanical turn of mind.
It is always by ingenious mechanical illustrations that he seeks
to enliven his arguments and impress them on the memory.
Even when he comes to the solemn problem of the unequal
distribution of wealth, it is by the conjecture that the grouping
of men according to income could be illustrated by a bell-shaped
figure that he thinks most powerfully to affect the imagination.
There is no reason to believe that this is particularly good
pedagogy.

But besides the question of teachableness there is the question
of the value of the matter taught. What kind of principles are
these with which Professor Fisher would equip the student?
How useful is the point of view which they would give him ?
What kind of an introduction would they provide for the under-
standing ajid study of concrete problems? In connection with
considerations of this nature, the book appears to be open to
serious criticism. As an instrument for understanding the most
important social and economic questions it is extremely weak.
Of j)olitical economy — in the literal sense of the term — the treat-
ment of economic questions as they affect the State — ^there is
none. The social point of view^ is entirely absent. Indeed, Pro-
fessor Fisher’s analysis hardly lends itself to the consideration of
the advantages or disadvantages of systems or circumstances from
any point of view. It does not suggest possible lines of progress
nor w^arn us off dangerous though specious policies. It does not
facilitate in any way the tracing of cause and effect. It is only

1913J

SCHMOXiXtflE : OHABAKTBBBaDEE

249

in the middle of the section on “Distribution,” which concludes
the book, that we learn anything of the production of wealth, and
that land, labour, and capital have something to do with it. And
there is nowhere any but a purely incidental mention of
machinery, or large-scale production, or any of the big features
of the industrial system of the present day. And as a result
Professor Fisher’s principles seem to have really very little to
say to the questions of “applied economics,” for which he hopes
they will serve as an introduction.

But perhaps this criticism is unfair, for the author is aware
that his book does not cover “the whole subject of economics.”
He argues with justification that “no such ‘complete* book
eatists, since no author is capable of writing it, and that all which
aim to be complete lack at least half of the subject-matter here
presented.” In so far as this book is to be regarded as supple-
mentary to ordinary economic text-books it is highly valuable. It
brings in a vivid way a number of hitherto isolated and largely
neglected branches of economics under one comprehensive view.
It is only when it is proposed to substitute this work for the
quite different analysis which generally passes for economics that
it is necessary to enter a protest.

H. D. Hendbebon

Gharakterbilder. By Gustav Schmoller. (Munich and Leipzig :

Duncker & Humblot. 1913. Pp. viii-f302.)

The twenty-two essays and addresses which Professor
Schmoller h.i.s brought together in the present volume vary greatly
in importance, and have been published or delivered at many
different dates extending over a long period. Though the majority
of them are products of the present century, some of the most
im{X)rtant date from the years 1896 to 1898; one, indeed, was
written as long ago as 1863. This last, an essay of only pp.
on Bogumil Goltz, has no very obvious claim to inclusion in this
collection except as a very early specimen of the author’s style ;
we are afraid that the English reader, not already acquainted
with Goltz’s career, will still remain in almost complete ignorance
of his achievements and importance. The other papers deal with
statesmen, administrators^ certain more or less representative
leaders of trade and industry, historians, economists and social
reformers— ‘all, with one exception, Germans. Originally produced
in most cases as commemorative or memorial addresses or notices,
these papers have the character of “appreciations,” though the

260 THB ECONOMIC JOtTBNAE [TONE

note of criticism is by no means absent. Their length varies from
50 to 2jr pages, and bears frequently little relation to the importance
of their respective subjects. We confess to some disappointment
on finding that the essay entitled “Was ist uns Friedrich List? **
is no longer than that devoted to Goltz, and that 3 pp. are deemed
sufficient for a study of von Miquel.

Some of the papers included in the volume are already well
known ; the four letters on the “ Social and Economic Position
and Importance of Bismarck ” have long been recognised as the
most illuminating account and criticism of one part of that
statesman’s activity, w^hilst the brilliant study of the two
nationalist historians, Sybel and Treitschke, is an established
classic. Of the less familiar papers now printed some, we
imagine, are likely to be passed over rapidly by English
readers (as, for example, those dealing with the administrators
Althoff and Thiel, or such men of business as von Mevissen,
Kilian Steiner, or Geibel) ; but there are others of great interest
and value. Such are the critical account of the economic doctrines
of Ernst Abbe and the remarkable experiment in industrial
organisation inaugurated by him at the Zeiss optical works at
Jena ; the masterly biographical sketch of Bumelin, who made
himself no inconsiderable place in German history as a politician
by the part Avhich he played in the strenuous days of ’48, as a
statesman by the reorganisation of education in Wlirttemberg and
the adjustment of the relations between the State and the papacy,
and as an economist and statistician by his contributions to the"
study of the population question ; ond the sympathetic and
surprisingly laudatory essay (of 1907) on the personality and
policy of Prince von Biilow.

It is almost unnecessary to say that these papers show all the
qualities which we have learned to associate with Professor
Schmoller’s lectures and WTitings, and have enabled him to
exercise so potent an influence upon economic thought, both in
Germany and elsewhere. There is great learning and wide range
of interest ; a critical spirit which is almost always kindly and
based on a sympathetic understanding of the motives and aims
even of those with whom he is at variance (this is strikingly
shown in the essay on Friedrich Naumann) ; acutenqps of analysis,
independence of judgment and lucidity of exposition. There is
a power of generalisation which is always stimulating, even
though it occasionally, as we think, leads Professor Schmoller
astray, as when he finds (p. 96) in an alleged remark of the then
Prince of Wales after Sedan, that he would one day avenge it,

251

1913} schholleb: cha^ktbebiIiBbb

an indication of the real nature of British feeling towards Grermany
since 1870 ; or draws from certain criticisms levelled against the
ConBervative Ministry which fell in 1905 the conclusion (p. 106)
that in England ‘^even to-day half of those called to Ministerial
office are the sons, nephews,* brothers-in-law, and sons-in-law of
the Prime Minister ” ; or commits himself (p. 98) to the proposition
that “historically and naturally Germany is not, and will not
become, an * Eroberungs-staat.’ “ Finally, there is intense interest
in present-day problems, and the conviction that it is the function
of the economic and political historian who would be worthy of
his name, to draw from his study of the past precepts to guide
his countrymen in the present.

Students of Professor Schmoller’s other writings will not be
surprised to find that one line of thought runs through and colours
all the essays before us. They are almost all studies of men who
in divers ways have contributed substantially to the creation and
organisation of that modern Germany which; in spite of some
defects, appears to Professor Schmoller to approach as nearly as
human nature permits to tne ideal State, and to be the most
potent instrument yet devised for the policical and social elevation
of mankind. Professor Schmoller ’s opinions as to the functions
of government are too well known to need exi)osition here ; they
are emphasised in the volume before us by the contrasting essays
on Adam Smith and List. And as the German Empire has been
made and shaped by Prussia, Professor Schmoller, though himself
a South-German by origin, has for Prussia, its princes and
bureaucracy, an almost passionate enthusiasm. It is fitting,
therefore, that this volume should open with an address on
Frederick William I., and that this should be followed by an
oration on the first Emperor ; but even the commemorative char-
acter of this latter discourse, delivered in 1897, hardly mitigates
the surprise with which we read its final sentence : “Das feste
Steuer der Hohenzollem wird uns fiihren, und der Segen Kaiser
Wilhelms I. und seiner Kegierung wird auf uns ruhen.“ Professor
Schmoller *s great admiration for Sybel and Treitschke is due in
no small measure to their Prussophil fervour ; for him it is one" of
the chief claims of Riimelin to political importance that in 1848-9
he, “almost alone in South Germany,*^ recognised that the political
future of Germany depended on the establishment of an ^imperial
authority hereditary in the Prussian royal house (p. 161) ; the
South German banker, Kilian Steiner, is praised not least because
(p. 236) as “an enlightened German patriot, he favoured the
leadership of Prussia.’’

262

THE BCOKOMIO JOtJBKAL

[3vm

The Prussian state system, based on the theory of an
enlightened monarch, aided by a skilled and impartial bureau-
cracy, raised above parties, keeping the war of interests within
bounds, and ruling men, even against their own wishes, for their
good, is for Professor Schmoller the "highest form of government.
To no suggestion of ‘‘responsible government’’ for Germany will
he listen : the racial, religious, economic antagonisms of parties
render it impossible to expect anything but disaster from the
adoption of such a system of government as prevails in the United
Kingdom ; the dependence of ministers upon the monarch alone
is the sole practicable method ; and those ministers can
only be drawn from the bureaucracy, for ministers chosen from
the ranks of men of business have seldom been successful (p. 109).
English students will admire the candour of these judgmehts as to
|X)litical inaptitude and the bitterness of economic controversy ;
but when they consider them as pronounced upon a nation which
has achieved so much in other fields, and when they reflect also
upon the burdens both of tariffs and armaments which have been
brought upon Germany, and in no small measure upon Europe
also, by the Prussian policy of the last half-century, they may
doubt if the Prussian system really merits all the praise
which Professor Schmoller and those who think wdth him have
lavished upon it, and if neo-mercantilism has really been of service
to humanity.

In the preface to the volume before us Professor Schmoller
explains that, now approaching the completion of his seventy-
fifth year, he has felt compelled to give up some part of his
university activities, in order to devote his strength and time,
so far as may be, to literary work. It may then nor be out of
place to express here the hope that he may be long spared to give
to Germany and the world the fruits of his great learning and
wide experience, and to enjoy the respect and regard in which
he is held by all economic students, both those who know him
only by his books and those who have had the added advantage
of immediate acquaintance, however slight, with a strong and
gracious personality.

Peboy Ashley

Industrial Evolution in India. By Alfred Chatterton, C.I.E.,

Special Adviser for Industries and Commerce in Mysore.

(Madras : The ‘‘Hindu Office. Ks. 3.)

In this volume Mr. Chatterton, who has himself done excel-
lent wwk in Southern India, especially in encouraging indi-

1913] CHATTBBTON : INDtJSTRIAI* EVOLUTION IN INDIA 268

genous industries, republishes a number of papers and articles
written by him from time to time on the subject. His views
are valuable, both because they are founded upon careful study
of existing conditions and on practical experiments entered upon
with a view to improving the methods employed, and because he
takes a broad view of his subject and discusses it with due regard
to the circumstances of the poorer classes of workers, not onljr
in the towns but in the villages. He gives a detailed account of^
such branches of industry as chrome tanning, hand-loom weaving,
w^ood distillation, milk products, and well irrigation, and describes
the methods in w^hich those industries have hitherto been carried
on, and the endeavours made to increase the efiSciency of the
labour employed upon them , which have in several caocs met with
considerable success.

The most interesting part of the book is that in which he
states his general conclusions as to the present needs of India
in the matter of industrial deveioj)ment. He points out that all
the mills, workshops, and factories in the country, which are
worked on modern lines, only employ about one million people;
and that while it would no doubt be advantageous to increase the
number of factories worked on a large scale, what India chiefly
requires is such improvements in the traditional methods employed
by small men working independently or in small bodies as will
be within their reach, and will enable them to compete with
manufactures imported from the more highly-developed industrial
communities of the West, without necessarily leaving their homes
and congregating in large towns.

In this connection he discusses the probable effect of a tariff'
imposed for the protection of infant industries, and it is inter-
esting to find that, unlike most economic thinkers who have
approached the question from the Indian point of view, he has
arrived at the conclusion that such a protective tariff would not
be to the advantage of India. His arguments on this subject
were chiefly addressed to the educated classes in India, to whom
he pointed out that, while the imposition of protective duties on
manufactures would no doubt encourage the development of
factories in India, and thus increase the amount of employment
given on the factory system to workmen and subordinate clerks,
it is probable that it would lead to the establishment in India
of enterprises financed by capital from abroad, in which all the
important posts would be monopolised by highly trained technical
experts, also imported fi’om abroad ; so that, while such a policy
would increase the cost of manufactured goods to the Indian

254 THB ttOONOMIO XOtTBNAL , [jUKB

consumer, it would hot be likely to make any large addition to
the openings for employment of indigenous capital and indi-
genous talent. He therefore advises the educated classes of India
to give up hopes of seeing a protective tariff imposed, and to
devote themselves to improving their own technical knowledge
and to urging Indian capitalists to finance such industries as
promise to be profitable under a system of free trade, and
especially those which will afford occupation to small men or
small bodies of workers.

He dwells with much force on the one-sided character of the
education which has hitherto been provided for Indian students,
and urges that it should be made less literary and more practical
than hitherto. He advocates hand and eye training, a cultiva-
tion of the powers of observation, and the co-ordination of the
various faculties in the service of their possessor, as opposed to
the mere development of the mental powers along comparatively
narrow lines, and holds that the aim of Government in the matter
should be to train the youth of the country, first in schools and
colleges, and then in workshops and laboratories, and finally, to
start them in life, giving them practical work to do under com-
petent supervision until they get accustomed to the new atmo-
sphere and surroundings, and are able to launch forth by them-
selves. It is satisfactory to see that an educational policy of
this character is gaining favour in India, and that the responsible
authorities are already moving in this direction.

Mr. Chatterton gives some examples which go tc show that
the Indian workman is ready to adopt new and improved methods,
when he is satisfied that they will enable him, by the employ-
ment of means within his reach, to increase his net out-turn, or
render his labour more efficient. The grower of sugar-cane has
in most parts of India discarded the old wooden mills in favour
of those made of cast-iron, with the result that the work is done
with less labour, and a higher percentage of juice is extracted.
In many places the weavers have recognised the advantage of
subdivision of labour so far as to prepare their warps in bulk on
rotary mills. In others, again, the fly-shuttle loom has been
substituted for the native hand-loom, with the result that the
speed of weaving has been doubled; wood and metal workers
almost invariably use some tools of European manufacture, and
sewing-machines are now to be found in almost every tailor's
shop. Mr. Chatterton himself has given special attention to the
problems of tanning, weaving, and irrigation from wells as con-
ducted by men with small means, and has introduced improved

1918] COPELAND: COTTON INDUSTET OP UNITED STATES 25S

methods, which are being gradually adopted in Southern India.
As he truly says, one of the great problems which India offers to
the civilised world is the application of the resources of science,
engineering, and commercial experience to an attempt to raise the
worker, and pit his skill, ingenuity and adaptability against the
large factory and the organised trust, with whose products he has
to compete ; in short, to develop the function of the man rather
than the power of the machine. There is work on these lines in
India for many Chattertons.

J. Wilson

The Cotton Manufacturing Industry of the United States, By
Melvin T. Copeland, Ph.D. Harvard Economic Studies,
Vol. viii. (Cambridge, U.S.A. : Harvard University. 1912.
8vo. Pp. xii4-415. Price $2 net.)

This volume, by the Instructor in Commercial Organisation
in Harvard University, was awarded the David A. Wells prize
for 1911-12. It gives a succinct history of the cotton and knitted
goods industries of the United States, an account of their present
position and organisation, and a comparison of them with the
cotton industries of other countries. The history of wages has
been omitted ‘‘because of the vast amount of time that would be
required to secure the data on which to base any reliable con-
clusions,’’ and no attempt has been made to compare the cost of
living in different countries. These omissions are regrettable but
intelligible. A table is given on p. 130 showing that the rate of
wages for weaving regular print cloth in Pall Piver discloses little
advance between 1884 and 1908, and the author might well have
supplemented it by a summary of the information, incomplete
though it is, that is given in the Census volumes. This is almost
the only complaint which one feels inclined to make about this
valuable book, which is of equal interest to the cotton trade in
the United Kingdom and to the professed student of economics.
Not only does it give a very thorough description of the competi-
tive power of the American industry, but it throws light on some
important economic problems.

In 1860 there were 1,091 establishments in the United States
engaged in cotton manufacture, employing 5,200,000 spindles and
122,028 persons, and producing an output valued at 116,700,000
dollars; in 1910 there were 1,208 establishments with 27,400,000
spindles and 371,120 employees, and the value of the output was
616,500,000 dollars. Measured by spindles, the United States

266 THB BOONOMIC JOUBNAIi [^TUNK

are now the second cotton-manufacturing country ; measured by
weight of raw cotton used, they are the first, for in 1905, with less
than half the number of spindles owned in the United Kingdom,
they consumed 13 per cent, more cotton. ‘^This is explained by
the larger production of fine yarn in England and the more exten-
sive use of the mule, on which the output per spindle is about
two-thirds of that on the ring frame.” The ring spindle was
invented by an American in 1831 * and in 1870 the number of
ring spindles in use in the States slightly exceeded the number of
mule spindles ; in 1905 there were more than three times as many
ring spindles as mule spindles in operation. In England, in 1909,
there were five times as many mule spindles as ring spindles.
The explanation of this divergent development lies mainly in the
fact that no skilled class of operatives grew up round the cotton
mills of America, which were regarded only “as a convenient
place whence to get. a start in life.” The supply of skilled immi-
grants was insufficient, and consequently the success of the trade
depended on adapting machinery to the use of the unskilled
immigrant, and especially of women and children. Such a
machine is the ring frame, which requires little experience
and skill, and, with its greater output per operative, secures a
reduction of labour cost. In the United States, labour cost is
dominant and every effort is made to lessen it ; in the United
Kingdom, to save in raw material is the important thing. This
distinction runs through every dej)artment of the industry. In
the preparatory machinery all the imi)rovements are British,
because British manufacturers have felt the necessity of economis-
ing in raw^ material , as the competition of other countries forced
them more to fine spinning. The use of the ring spindle does not
grow quickly in England because the short-stapled cotton used in
spinning low counts in that country would not stand the strain of
the ring frame. Further, ring weft yarn must be spun on bobbins
and not on cops, and the freight charges on the former from
spinning-mill to weaving-shed wwild increase expenses. In the
United States the yarn is usually spun and woven in the same
mill, and, says Dr. Copeland, in the States “the combination of
spinning with weaving is as much a result as a cause of the
preference for the ring spindle.”

The same pressure of labour cost has led to the extensive use
of the Northrop loom (invented by an Englishman) in the States.
Apart from the facts that the mule cop is not so well adapted as
the ring-frame bobbin for use with that loom, and that to scrap
iPacbinery is always costly. Dr. Copeland thinks that “its use

1913] COPBIiAND : COTTON IND0STBT Otf UNITED STATES 857

will probably be more limited in England than in the United
States. . . . The loom has been adapted but gradually to the
weaving of fine goods, and even now many of the fine goods
manufactured in England could not be woven advantageously on
the Northrop loom. Thus, there is a considerable field in
England which it cannot reach, a field which is not only abso-
lutely, but relatively, larger than in the United States. In spite
of the advance in the production of finer cotton cloth in this
country, the bulk of our output is still the coarse and medium
grades of plain goods.”

Dr. Copeland is very emphatic that the growth of the cotton
and cotton-knitted goods trades is mainly due, not to the tariff, **
but to American inventive genius stimulated by the compulsion
to keep down labour costs.

The advantages of large-scale production appeal to be fully
obtained in America by a plant of 50,000 to 75,000 spindles and
one to two thousand looms. As the trade has grown the product
has become more diversified and the mills more specialised. A
few companies have mills with from 100,000 to 650,000 spindles,
but these are really combinations of several mills and are divided
into independent departments. Association and amalgamation of
companies have not been successful in spinning and weaving,
because all the possible economies of production are realised at
an early stage. This fact supports the theoretical view that there
is a limit to the growth of the business unit. Its importance
must not be over-strained, however, for the typical modern Lanca-
shire mill has about 80,000 spindles. Moreover, the theory has
always been expressed too narrowly, for it is confined to produc-
tion, whereas the great economies of amalgamation lie in the
sphere of distribution, partly directly through economies in selling
expenses and partly indirectly through elimination of the waste
of competition. These influences manifest themselves in America
through the increasing association of manufacturing and selling
houses, a development which proceeds indifferently from both
ends. The community of interest among New England cotton
manufacturers is another important factor in the restriction of
competition. It operates through mutual stock-holdings, and
especially through the interests which selling houses, who finance
important sections of the trade, have in manufacturing firms.

The organisation of the American cloth market in its early
years took the form of auction sales. This was the method by
which imported goods were disposed of, and, as the import trade
declined under the influence of the early tariffs, merchants turned

268 . TEB BCONOMIO JOtTBlJAXi [TTOB

their attention to financing the new cotton industry and the
"current method of sale was naturally adopted. As the country
became more settled and transport and banking systems more
developed, sales through houses selling on commission, and, later,
sales direct to large customers, have become more characteristic
of the business. In 1851 about 7,500,000 dollars’ worth of dry
goods, two-thirds foreign and one-third domestic, were disposed
of by auction, and it is significant of the youth of American
business development that as late as 1897 there w^ere large public
sales of surplus stocks. One important function of the selling
house has been the financing of the trade by granting long credits
to customers, a function which is still of importance in the
marketing of the products of southern mills, whose live capital
is seldom adequate. For most of the New England manufac-
turers, however, it is no longer necessary to obtain financial aid
either through advance of money or endorsement of notes. The
urgency of keeping down labour costs compels the mills to run
on large orders; as a rule, no order for less than 2,000 yards is
accepted, and some mills insist on orders of 6,000 or 10,000 yards
of a single design. This factor in production has the result of
making the selling house more necessary in distribution. The
most modern agent in distribution is the merchant purchaser of
grey goods who has them bleached, printed, &c., to his order,
and his prominence has been of late becoming more evident. The
market is becoming more settled and at the same, time more
diversified, and corresjx)nding to these changes the American
organisation is approximating to the English so as to adjust the
growing volume of trade more closely and speedily to the varying
demands.

Asia is the largest market for American cottons, especially
Manchuria, which imports almost exclusively cheap drills and
sheeting for making padded garments. Canada is a more stable
market, for which the United States has an advantage of position
despite the tariff. In South and Central America English and
Germans have established close commercial relations by means of
steamship lines, banking houses, and other mercantile connec-
tions, and consequently special efforts will require to be made if
the export trade of the United States cotton industry is to develop
largely. The United States import trade is mainly in lace and
fine goods, and has grown despite increasing attempts to restrict
it by heavy duties. The whole of the chapter on import duties is
worth reading, but there is only space to quote the author’s con-
clusion : “If the manufacturers were willing to give up some of

1918 ] OOPBLAND: OOTOO^^ OB tTKiXBD SJATBS 259

this useless ‘ protectibn * and seek a reduction in the duties on
their supplies, they would strengthen their competitive position.
Machinery, which is protected by a forty-five per cent, duty, costs
more in America. . . . The duties on dye-stuffs and other minor
requisites are also handicaps to the American cotton manufacturer
in his competition for a foreign market.”

Only a brief reference can be made to the great development
of the cotton industry in the Southern States from 561,000
spindles in 1880 to about llj millions in 1910. Though this is
partly due to savings in freight, power, and taxes, “the corner-
stone of the structure has been the supply of cheap and tractable
labour.” This local supply of labour has been exhausted, with
the result that wages have risen, while at the same time the
publicity that has been given to the deplorable extent to which
child-labour was employed has led to some efforts at restriction
and to some attempts to improve social conditions. The com-
petition of the South in coarse goods was severely felt , especially
during the depression of 1893-7, and the New England manu-
facturers were to some extent forced to the manufacture of fine
goods. The advantages of the North, however, in capital and
credit facilities, in proximity to markets, in experience, and in
climate, have in the long run outweighed the temporary advan-
tage of cheap labour. It has been predicted that the North would
be restricted to the manufacture of fine goods and the South to
coarse goods, but “it is by no means certain that this will be the
ultimate outcome. On the one hand the production of coarse
goods shows no sign of diminishing in the North, and on the other
hand several fine goods mills have been erected in the South.
Furthermore there may grow up in the South a permanent class
of operatives who will develop especial skill in the manipulation
of cotton while the inundation of foreign immigrants continues
in New England. The one prediction is as good as the other.”

The last 120 pages of the book deal with the position of the
United States compared with that of the other leading cotton-
manufacturing countries, but they are so packed with information
that they defy further condensation. These, and several other
excellent chapters which have to be passed over very cursorily,
the student must study himself, but he will do himself wrong if
he passes over a single page of this excellent book without careful
consideration.

Henry W. Macrosty

260

THE BOONOMiC JOtTENAIi

[JTOB

Intorno al concetto di Reddito hnponibile e di un sistema

d'imposte sul reddito consumato. By Luigi Einaudi.

Pp. viii-f 105. (Torino : Vincenzo Bona. 1912.)

SiGNOB Einaudi’s important work takes as its starting-point
the familiar distinction between income received and income con-
sumed. Income received is the addition which accrues to a
man’s possessions during the course of a given period of time;
income consumed is this addition minus such part of the accretion
as is added to capital either in the form of machines or of personal
capacity. From this familiar distinction he proceeds to the no
less familiar thesis that a fax on income received implies double
taxation of that part of income which is saved, and that, if every
pound of income is to bear an equal burden, taxation must be
confined to income consumed. Hence, the practical inquiry, By
what sort of fiscal, arrangement can this state of things be brought
about?

To ascertain directly the amount of income consumed for
purposes of taxation is impracticable owing to the facility with
which evasion can be. practised. Consequently, resort must be
had to one or other of the two following expedients, namely :
(1) the taxation of the material goods and personal services on
which a man spends that portion of his income which he elects to
consume ; and (2) the exemption from taxation of such portion of
income received as a man is presumed to save. Of these two
expedients the former is confronted with difficulties of application,
the latter with a diflSculfcy of principle. It is plain that, if an
equal rate of taxation were imposed upon all “consumables,*’ the
whole of income consumed would be taxed once at the rate
selected. But the adoption of such a policy would necessitate an
amount of State inspection over domestic and business arrange-
ments that would be not only intolerably irritating, but also
immensely expensive. It is essential, therefore, that taxation be
confined to forms of expenditure which can be discovered with
reasonable ease, such as expenditure on house-room or servants, or
on commodities that necessarily pass rough a few ports
where Customs officers can be ix)8ted, or on commodities that
are mainly manufactured in large establishments susceptible to
supervision by excise officers. This necessity would not, of
course, prevent the taxation of consumables from serving as a
means to the equal taxation of all income consumed, if everybody
was accustomed to consume different goods in the same proportion.
Since, however, no custom of this kind exists, it follows that

19131 iRIN AUPI : INTOBKO AL OOHCBtm) t)l BBBMXO WPOSSIBILB 261

the taxution of consumables^ taken by itself > cannot provide a
systeni conformable to the postulate of equality.*’ Nor is this
all. Up to this point it has been tacitly assumed that all
saving takes the form of external objects. Signor Einaudi now
shows, however, that, besides investment in things, there exists
also investment in people. To satisfy the postulate of equality,
the latter as well as the former must be exempted from taxation.
But investment in people includes whatever part of expenditure
on house-room, personal services, food, clothing, and so on, goes
to build up the productive powers of men, and, more especially,
of their children. To separate in any exact way this form of
expenditure from expenditure on consumables that are not capital
goods is impossible; for the same commodity, according to the
circumstances in which, and the persons by whom, it is consumed,
sometimes is, and sometimes is not, a capital good. The best w’^e
can do is to lay down a rough approximate rule -to the effect that
those goods and services should be specially selected for taxation
on which is spent income left over after the satisfaction of vital
needs. Even yet, however, there remains a final difiSculty in
the way of accepting a system of taxation of consumables as the
right practical sequence to the postulate of equality. This diffi-
culty arises out of the fact that, after a point, increase in the rate
of tax levied upon any commodity jdelds a diminishing and not
an increasing revenue. Consequently, this system may i>rove
incapable of providing the State with the money that it
needs, and it becomes essential to combine it with some other
device.

The alternative expedient referred to at the beginning of the
preceding paragraph was the taxation of income received —
in the manipulation of which the convenient device of the
levy at source can be employed — coupled with the exemption
of such portion of this income as is presumed to be saved. The
limit above which this exemption is made will, of course,
be different for different classes of persons, for those with large
families and those with small families, for those with incomes
derived from their own work and those with incomes from
investments, and so on. The exemption, however, must in
every case, for practical reasons, refer to classes and not to indi-
viduals. Herein is the difficulty of principle, referred to above,
with which this expedient is confronted ; for the amount of saving
which is presumed in respect of any class necessarily refers to
the average member of that class, and is, therefore, necessarily
erroneous in respect of those members — and they will be numerous
No. 90. — VOL. XXIII T

282 THB BOONOMIO JOUBNAIi [jUHE

—whose savings are greater or less than the average savings of
the class.

From what has been said it is sufiBciently obvious that neither
the expedient of taxing consumables nor that of taxing income
received, with exemptions for presumed savings, nor any com-
bination of the two, can provide a system wholly in conformity
with the “postulate of equality.” Nevertheless, Signor Einaudi
shows that not only is it possible in practice to advance a consider-
able distance towards such a system, but that this is actually done,
not consciously, perhaps, but none the less effectively, in many
parts of the fiscal machinery that is actually in operation in
modern States. Thus, a step towards the required system is
taken whenever a higher rate of taxation is imposed upon unearned
than upon earned incomes, for, other things being equal, the
possession of an earned income may be presumed to render larger
savings necessary' than the possession of an equal income that is
unearned (that is to say, derived from investments). A like step
is taken when a general income tax is associated with a special tax
on property, whether levied annually or on occasions upon which,
owing to the death of the owner or for other reasons, the property
changes hands. This system, like the preceding, implies that, of
two persons with equal incomes, that one who needs to save more
will, in general, be taxed more lightly than the other. It is
evident that Signor Einaudi looks with approval upon these and
other similar devices.

What has been said will suffice to give a general idea of the
contents of this interesting volume. The author on the last page
pleads for a criticism directed to the question whether the structure
he has built up is rightly based on the postulate of equality,
rather than for one directed to this postulate itself. For my
own part, however, I am unwilling to follow the line thus laid
down. The conclusion which Signor Einaudi draws from his
premises I believe to be correctly drawn. But the device of
setting up the postulate of equality without discussion and basing
upon it an elaborate discussion, is calculated seriously to mislead
opinion. This “postulate of equality” in Signor Einaudi’s sense,
namely, that every pound of income ought to bear an equal burden
of taxation, is obviously not given in intuition. It can, therefore,
only be defended either as a derivative from some more funda-
mental maxim concerning equity between persons or on the ground
that to act upon it makes for maximum satisfaction. The deriva*
tion “equity ” Signor Einaudi does not attempt to establish ;
nor does it seem to me possible that, had he done so, the attempt

1913] STBVBNS ; INPUSTBIAL COMBINATIONS AND TBDSTS 263

could have succeeded. It is, however, plausible to maiutain, and
has, in fact, been maintained by many writers, that equal taxation
of every pound of income ultimately maximises satisfaction, be-
cause it does not interfere with the natural distribution of income
between the rival uses of saving and spending. Signor Einaudi
himself makes use of an argument of this kind in reference to
the ^xation of undeveloped building land. But — and this is my
fundamental criticism — his postulate of equality, when he comes
to apply it to practice, slides away from the meaning that every
pound of income ought to be taxed equally, to the quite dilferent
meaning that all income-owners ought to be taxed in proportion
to their incomes. Both these propositions lead logically to the
concentration of taxation upon actual consumption and the
exemption of actual savings. But only the second of them leads
to the taxation of presumed expenditure and the exemption of
presumed savings. The former of them in nO way justifies this
arrangement, for the reason that the exemption of presumed
savings does noL hinder an income tax from differentiating against
pounds that are in fact saved as compared with pounds that are
in fact consumed. When, at the margin, a man is debating
whether to invest or to consume another pound, it will still be
the fact that if he consumes it, he will be taxed on it once, and,
if he invests it, twice. The distribution which he makes of his
resources between the two uses will, therefore, be the same if
presumed savings are exempted as it would be if nothing was
exempted. Thus, it appears to me that Signor Einaudi, in his
postulate of equality, has confused two propositions of which the
former alone is sufiSciently plausible to warrant an attempt to
build a theory of taxation upon it. His volume, interesting as
it is, would have gained in v^ilue if more care had been bestowed
on the foundations.

A. C. PiGOU

Industrial Combinations and Trusts. Edited by William S.

Stevens, Ph.D., Columbia University. (New York: The

Macmillan Company. Price 8^?. 6d.)

This book is a collection of original documents on the origin,
policy, and control of Trusts and similar organisations ; and it is
invaluable to students of this side of economic development.
Though the author has simply published his authorities in their
order, the classification and arrangement are so admirable that
^the book is really an impartial treatment of the Trust problem.

264 TH!is ledoi^oino jodbnal {tone

One could wish that a similar service <iould be rendered us in
regard to the Kartels. The agreements which created the driginal
Trusts in oil and sugar, the decisions which upset that method,
and the transformation of the Oil Trust into a Holding Company
can be read as a consecutive history in the early chapters, and in
so short a space as to define easily for the student who comes to
the question for the first time the precise steps in this interesting
history. Perhaps the most important chapter in the book is that
on “Methods of competition and restraint of trade.” These
methods, as the author remarks, raise the vital question of the
“normality” of Trusts. It is his own theory that “the advan-
tages of combination are to be found chiefly in certain methods,
and not in the frequently alleged economies of saving of cross
freights, &c. It is a very serious question whether, should certain
practices be prevented, the alleged natural tendency to combina-
tion would not vanish into thin air.” For this reason, he devotes
a very long chapter to the tactics and strategy of industrial
warfare, and it is fascinating reading. Besides the boycott and
the buying out of rivals, there are the methods of the “little
yellow dog,” or bogus indej)endent, company, in great variety;
the extract on pp. 326-7 is not without its humour : “If I was
not able to regain the (local) trade, 1 was to whistle by writing a
letter, and they would then send on a little yellow dog . . . known
as the Climax Manufacturing Company. ... So we didn’t have
to lower our firices to the adjoining trade, but the yellow dog got
the business.” Then there is the organisation of the “Competi-
tion Department,” at other times the “Ways and Means Depart-
ment,” with its special force of inspectors of other people’s
business, known as the “knock-out men,” in many oases obtain-
ing their information regarding the trade of outsiders by payments
to railway officials. Here is a message from headquarters to a
“knock-out” man: “Keport received, and is satisfactory for a
beginner. Try to be more acci|Eite in the information in future,
and have report include in full (1) dates when cars arrive, (2)
whether box or tank cars, (3) all letters and numbers on cars, (4)
contents of cars.” And wffiat is to be said of this? — “The
defendant . . . caused to be maintained at the factory a display
room known as the ‘ graveyard.’ In this room were shown
(details) of competing companies which had been forced out of
business by the methods above set out. Prominent display cards
reporting the names of these companies, the date when they went
out of business, and the amount of money lost by them, appeared
prominently in the exhibit. . . . This process of intimidating

1918] FMCK : FBOBIjBMB 0EB WBMWIBTHSOEAFf 265

manufacturers (purposing to go into the business) was known as
the ‘ glooming ’ process, and the room was sometimes known as
the ‘glooming* room” (p. 366), The “Gary dinners’* offer an
ingenious argument on the question when an agreement is not
really an agreement.

I do not think it is shown that Trusts owe their existence to
such methods, which imply, in fact, both that the combination is
already strong enough to use them, and that the attack of the
outsider is a constant feature of the history of Trusts. The detail
of organisation is one of the striking asi>ects of American life as
a whole ; and inevitably it has found its way into industrial com-
petition. Except for bribery and definitely illegal practices, these
are instances of competition made quite efficient: a’^d they show
the immense difficulty of deciding on the morality of business
methods by the use of standards that are purely economic. They
show too that, whatever Trusts have done, they have not
exterminated competition, but rather displayed its possibilities.

D. H. Macoregob

An Encyclopcedia of Indusirialism. (London : Nelson and Sons.
Price Is.)

This is a short volume of reference on the chief problems of
Labour and Employment. Most of the articles offer a historical
summary of their subjects, an analysis of existing conditions,
and an indication of the best sources of information. In some
cases there is also given a useful comj^arison of English and
foreign results. The work is in the hands of ex])eri8 ; the article
on “ Wages *’ is by Mr. Bowley , on “ Strikes “ by Professor Nichol-
son, on “Labour and Politics” by Mr. Philip Snowden, on “Co-
partnership” by Mr. Vivian, on “Employers’ Unions” by Sir
Hugh Bell. Out of the usual run of articles on these subjects is a
most interesting statement by Mr. Frank Nasmith of the con-
ditions of “Factory Management.” The book should be of special
value to Workmen’s classes and study circles, and to academic
students for its useful bibliography of official documents on the
social question. L- H. Macoregob

Prohleme der W eltwirthschaft : Kanada, Volkswirthschaftliche
Grundlagen und W elimrtJischaftUchc Bcziehungen. By
Dr. Anton A. Fleck. (Jena : Gustav Fischer. 1912. Pp.
xiv + 367.)

This handsome quarto volume forms the tenth of a series of
monographs issued under the editorship of Professor Dr. Harms

266

XHB BOOKOMIC JOURNAL

[JUNE

by the Institul fur Seeverkehr and Weltwirthgchaft at the Uni-
versity of Kiel. The previous numbers deal with the position of
the sailing-ship in international trade, the iron-ore supply of
Europe, Denmark, tobacco cultivation in the Dutch Indies, the
economic life of primitive peoples, national trade and world trade,
Japanese industry, Emden and the Dortmund-Ems canal, the
sliding scale for corn duties. The list is an excellent one, and
the titles of the forthcoming parts are no less attractive. The
present volume first sketches the chief features of the physical
structure of Canada and the main lines of the historical and
political develo2)ment of the country. The policy of the Grovern-
ment in dealing with the land and with emigration is next dis-
cussed, in order to complete the description of the social basis of
the economic life of the Dominion. About one-half of the book
is then occupied wdth a detailed description of agriculture,
forestry, fishery, industry, and transix)rt, incorporating all the
available statistics. If, as the author says, Canada has not been
fully discussed in the economic literature of Germany, his book
should fill up the gap in a most admirable fashion. Indeed, there
can be few^ volumes as comprehensive in the abounding supjdy of
English books on Canada. The only serious defect is the want of
a number of small sketch-maps in the text, for the large official
map which is supplied with the book is not very handy for use
by the reader.

The last third of the book deals with the economic relations
of the Dominion to the rest of the w^orld, and in particular to the
United Kingdom and to the United States. The author holds that
Canada is economically dependent on the United States, and that
this dependence must be increased by the need of the States for
Canadian foodstuffs and raw materials, whether these are obtained
by means of a reciprocity treaty or a one-sided reduction of
import duties, for the States would pay for those imports by an
increased exportation of manufactured or semi-manufactured
goods. As Canada earnestly seeks to enter into economic relations
with the wdiole world, and has no intention of limiting her manu-
facturing activity, Dr. Fleck points out that the combination of
these different factors must lead to a greater intensification and
complication of the trade-exchange between the Dominions and
the States. Finally, he adds, “The danger of a complete absorp-
tion of the Canadian State, with its small population, in the
powerful economic unit of the United States, with a population
which will soon number a hundred million inhabitants, will
always be a warning for Canada not to allow economic fusion to

1918] LBNJZ : KONZEJNTBATIOJff IM SBESCHIFFAHBTSaEWBBBB 267

pass beyond a definite limit. The political feeling of independ-
ence is developed to a high degree in Canada, as its whole
economic and political history shows. For the preservation of
political independence power is necessary, and as Canada will not
possess this for any period that we need consider, the centre of
gravity of Canadian policy must always gravitate more to London
than to Washington.*’

Henry W. Macrosty

Die Konzentration im SeeschiffahrisgeweTbe, By Dr. Paul
Lbnz. (Jena : Gustav Fischer. 1913. Pp. viii + 142. Price
m. 4.)

It is more than ten years since the formation of the Inter-
national Mercantile Marine Company under the auspices of the
late Mr. J. P. Morgan. The absorption of the White Star Line
in this American Trust caused a feeling almos’t of dismay in this
country, and made everybody aware of the existence of combina-
tions in the shipping industry. For several years little was heard
about them, although the question of shipping rings and deferred
rebates attracted some notice. During the last two or three years
much public attention has again been drawn to the subject, partly
owing to the numerous acquisitions of the Royal Mail Steam
Packet Company, and partly owing to the rumours concerning
the intentions of the P. and 0, (Company.

The reviewer took up Dr. Ijenz’s book in the anticipation of
finding a critical account and explanation of the renewed move-
ment in favour of combinations in the shipping industry, only
to be disappointed. It contains merely a brief reference to the
latest developments; all the essential material for the writing
of the book existed in 1909, when the Report of the Royal Com-
mission on Shipping Rings was published. Dr. Lenz has
collected practically no new facts concerning shipping combina-
tions. On the basis of published material, he investigates, from
a theoretical rather than from a historical staridjK>int, the causes,
extent and effects of combination in the shipping industry. The
various forms which combination may take, c.g., amalgamation,
the purchase by one company of the majority of shares in another
company, pools and conferences, are carefully described, but the
book is a descriptive study only in a secondary degree ; primarily
it is an analysis of the organisation of the shipping industry.

In more than one case, Dr. Lenz’s desire to be strictly
scientific in his treatment of the subject has led to the introduc-

268

ram BcoKowc joubhajj [smn

tioi^ of matter,, which^ a.ppears to be somewhat superfluous iu a
short book ; e.g., the author might have stated his defluition of a
cartel, without devoting four pages to discussing the definitions
of various authorities ; again, he might have classified shipping
combinations on his own system, without allotting two pages to
criticising the systems of classification of other writers.

Douglas Knoop

Lc Banche e il Mercato Moneiario, By Marco Fanno, (Eome :

AthensQiim. Pp. 394.)

Mr. Marco Fanno, after having written valuable articles in
the Bevista Ligure on the development of the issue banks
(L'cvoluzione delle Banche d*Emissione) has now published, in
book form, his ideas and the result of his studies concerning this
important question. Well aware how intimately the position of
the issue banks and other banks is connected with the situation
of the money market, he has, in the second part of his book,
devoted special attention to this market, which, as he rightly
explains, becomes more international and more important every
day.

What Mr. Marco Fanno writes further concerning the
development of banking and the services that are rendered by
the banks in charge of the issue of bank notes is, of course, not
unknown to those who have made a special study of these
questions, but he deserves a word of praise for the clear and
comprehensive way in which he treats the different arguments
that plead in favour of one single issue bank or of many issue
banks. However, whether there be in a country one or more
issue banks entrusted with the issue of the fiduciary circulation,
it is imperative that such banks, representing, so to say, the
credit of the nation, should always apply the principles of sound
finance and limit their transactions to such as are permissible to
a bank of issue. Unfortunately, the financial history of several
countries proves that their issue banks have not always confined
themselves to their true mission, but have engaged themselves in
transactions involving the loss of many millions, while others
have had to suspend payment, showing that the fiduciary circula-
tion of a country is a matter of the highest importance, and
which cannot be disturbed with impunity. When issue banks
are in danger the consequences and ensuing confusion in business
are such that the intervention of the State has always been, and
always will be, indispensable to alleviate the evils of a most
dangerous situation.

1913] pbhtbb: die aBbexts oenosiSeksohaftbk italibns 2IB9

After having dealt with the issue banks, Mr. Fannb gives
interesting partidulars concerning the development of banking in
general, and the great extension which the leading European
banks have given to their sphere of action by increasing their
capital in order to take over the small country banks, and by
creating numerous branches, especially in the industrial towns.
His figures concerning the increase of capital of several foreign
banks are, however, not entirely “up to date.“ They do not go
further than the year 1907, w^hile it is well known that since
then, and especially during the last three years, many banks
have increased their capital considerably and created many new
branches. But what he says concerning the manner in which
the German and other Continental banks are working is worth
reading.

Altogether Mr. Fanno’s book contains many interesting
chapters, and will be of great use to those who want to studv the
development of banking and the situation of the international
money market, which is so closely connected with the discount
and gold policy of the issue banks and with the balance of trade
and balance of payment of the different nations.

C. Eozbnraad

Die Arbeits- und Pachtgenossensehaften Italiens. By W. D.

Prbyer, (Jena : Fischer. 1913. Pp. 228.)

This book deals with two co-operative movements, which are
in a sense peculiar to Italy, but which certainly possess interest
also for non-Italians, and one of which may very well serve as a
model to ourselves in our efforts to create a tenant peasantry.
On these two subjects Herr Preyer’s book is unquestionably the
fullest and best now before the public. However, the author
considerably overshoots the mark when claiming to be the first in
the field to deal with them. Even in the German Press, of
whose negligence he makes a point, both subjects have been
discussed with a fair amount of fulness something like ten years
ago in Blatter fur Genossenschaftswesen. He is likewise wrong
in stating that co-operative renting of land has not extended
beyond Italy, Roumania, and some feeble beginnings in Russia.
Not to speak of one or tw^o of our owm newly-formed Allotments
Associations, such as the “Northern,’* and Mr. W. J. Charleton's
“Wayford Tenants,” there are eleven flourishing common-land
renting societies, of exactly the same type as the Roumanian,
in Servia. Moreover, the author is woefully behindhand in his

270 THE ECONOMIC JOUBNAL [JUNE

statistics# , Already in 1908 there were known to be about 160
affManze collettive established, and last July the number was
given as 160.

It is a little difficult to see why Herr Preyer should have
bracketed the hraccianti societies together with sindacati and
consoTzi agrazi as specifically “ agricultural*’ societies. They
are working-men's societies aiming, in the first instance, at self-
employment, out of which has grown, as in the ideals of our
Eochdale pioneers, the aim of independent settlement! upon the
land. The braccianti — that is, the men who simply bring their
“arms ” to their job, navvies — however, are generally and properly
classed together with the muratori, the suolini, the biroccianti, the
barcaiuoU, (fee., as working-men co-operators. They have made
roads, built dykes, built even a short railway, and worked in the
Laurium mines. Their movement began much earlier than Herr
Preyer puts it, owing — as he rightly explains — to the cessation of
railway construction and the like. He talks of 1905. The bracci-
anti were busily and sturdily struggling along, conquering for their
class a better position and better pay, and holding a large terri-
tory at Ostia on improvement lease, in 1893. The Baccariai Act,
which is their charter, dates from 1889. In 1894, in the Molinella
district, they had made themselves masters of the situation.

These men were throwm out of work, as has been stated.
Although in after time they have displayed considerable capacity
for striking — for which they were cruelly punished in the dragon-
ades of 1898 — they found themselves at the time too weak and
disorganised to venture upon a fighting policy. Bo they sought
to obtain independent contracts, dispensing with middlemen.
The authorities showed themselves favourable. The Baccariai
Act authorised public authorities to give such societies contracts
up to £4,000 without asking for security. M. Luzzatti, as
'Minister, considerably increased the figure, and pressed the
matter upon the attention of local bodies. Public authorities,
like Count Guiccioli, when Prefect of Eome, and Comm. Dallolio,
when Syndic of Bologna, particularly praised their work. In the
early days it w^as a thing to w^ing admiration from one to how
these poor men laid by out of their takings in order by slow degees
to collect a working capital of their own. Barring the persecutions
of 1898 they have done w^ell and prospered. One remarkable
feature in their growth to powder has been the comparative ease
with which they obtained working funds — not (at first, at any
rate) from co-operative banks, which one might have expected to
be helpful, but from private capitalists.

1913] POBD : CO-OPBBATION IN NEW BNGIiAND 271

The’affittanze movement was grafted upon the original stock
about 1901. It was at a special gathering held after the Eeggio
Congress of that year that the programme was settled. And the
braccianti accordingly took their place in the Lego, nazionale —
not among agricultural societies. The development was natural
enough. All these men were dwellers in rural districts, familiar
with agricultural work, and desirous of settling comfortably on
Tura, which need not be paterna. Tenancy is difficult in Italy,
because the latifundia, which, according to Pliny, perdidere
Romam, are still in the ascendant, and Italian landlords are
uncommonly grasping. They would also, not unnaturally, not
take the risk of letting in detail to small unsubstantial men. The
substitution of a co-operative society, pledging itseU in common,
like our Tenant Co-operators,” removed one hindrance. And
now these common settlement societies appear to flourish. One
is particularly thankful to see the movement spreading in so
encouraging a way in Sicily, wliere there is great need of it. The
fact that, although these braccianti rent in common, they as a
rule cultivate separately, does not, as Herr Preyer appears to
infer, prove that they are not Socialists — for they consider them-
selves Socialists to a man — but that common sense is stronger
than theory.

Herr Preyer incidentally touches upon Mezzadria— the old
Koman Medietas. But there remains a great deal more to be said
under that head. Antiquated as it is, during recent years of
agricultural depression M ezzadria proved almost the salvation of
Italian agriculture.

Hbnby W. Wolff

Co’-operation in New England, Urban and Rural. By James

Ford, ,Ph.D. (New York: Survey Associates. 1913.

12mo. Pp. 260. Price $1.50.)

This little book, apart from telling British readers about
” co-operative ” institutions in parts of the United States, ought
certainly to prove useful in its own country. The United States
literally swarm with institutions, at any rate, of the agricultural
type, bearing the co-operative name. They, indeed, number
thousands. However, of all these teeming thousands, there are
very few indeed that would pass muster before a genuinely co-
operative tribunal. The majority are rather “rings” formed in
opposition to traders’ rings, which in the past have truly worked
sad havoc among farmers. And yet the United States need

272 THE ECONOMIO JTOUHNAL [TONE

<50-operation. 'Three Presidents — that is, the present, and his tw^
immediate predecessors — ^have borne public witness to this.
tJnder the special benison of the Senate the Southern Commercial
Congress is sending out a Commission of some hundred repre-
sentatives to Europe to learn what co-operation applied to agri-
culture is. In America this question has for a little time past
occupied many minds. The State Department of Wisconsin has
particularly distinguished itself by its researches. The “Eussell
Sage Foundation,” of New York, which publishes. the book here
noticed, has turned its attention to the same subject, and, as its
General Director informs me, the object of the book is quite as
much to show Americans “what may not properly be called
co-operation as what some of the probabilities for it are.”

Dr. Ford has well accomplished his task. He tells his story
lucidly and succinctly, and is evidently master of his subject.
Among other things he explains the causes which have thus far
prevented co-operation from prospering. There is not, in truth,
much to tell about that “industrial” co-operation which the
Americans call “urban.” As among ourselves, industrial co-
operation made an early start about the “thirties” with the same
aims in view. But it did not live on or develop like our own.
Now the existing laws stand rather in the way. However, foreign
immigrants readily manage, notwithstanding, to establish their
accustomed stores themselves. On agricultural ground there is
plenty of “co-operation” and to spare, but it is self-seeking,
speculative, in many cases exclusive. It is to be hoped that the
forthcoming American inquiry into European methods will correct
this, and place American agricultural co-operation on the proper
footing. The present book may prove a good preparation for this.

Henby W. Wolff

Birminghmn Studies in Social Economics and Adjacent Fields.
Edited by Professor W. J. Ashley. I. — Environment and
Effidency : a Study in the Records of Industrial Schools and
Orphanages, By Mary Horner Thomson. ll,~The
Public Feeding of Elemeyitary School Children: a ^Review
of the General Situation, and an Inquiry into Birmingham
Experience. By Phyllis D. Winder. III. — The Social
Policy of Bmnarck: a Critical Study, with a Comparison of
German and English Insurance Legislation. By Annie
Ashley, M.A. (1912. Longmans, Green and Co. Price
25. each.)

An editorial note states that “the studies in this series are the
outcome of the inquiries of students working for the Social Study

278

1918 ] BIKMIK0HAM STUDIES IH SOCIAL ECONOMICS

Higher Diploma or for the Higher Degrees of the University of
Birmingham.” The Social Study course of the University of
Birmingham is the “newest” enterprise of that “new” Univer-
sitjr^ and deserves attention in itself before we look at its first
fruits. A committee composed of teachers in the University and
of representatives of the National Union of Women Workers, the
Workers* Educational Association, the Trades’ Council, and other
institutions in the city, supervises a course of systematic instruc-
tion intended to provide for the needs of those desirous of serving
on local governing bodies, of engaging as officials in national or
municipal administration, or of taking part in philanthropic work,
or as “welfare workers” at factories, as well as for the training
in social questions of the clergy and the officials of trade unions,
friendly societies, &c. The course covers one or two academic
years, and embraces (a) university lectures in industrial h’ story,
local government, sanitation and hygiene, elementary economics,
industrial legislation, and social philoso]^hy ; (b) visits of obser-
vation to institutions dealing with the administration of poor law,
education, and justice, with sanitation and hygiene (hospitals,
housing improvements, &c.), and with industrial conditions
(factories, labour exchanges, &c.) ; (c) practical work — office work
at the Birmingham Aid Society and the Birmingham C.O.S.,
visiting in connection with these two societies, and work as a
helper in an approved school, club, class, &c. Exemption from
certain parts of the practical work may be allowed to students
already possessing such experience. A diploma is granted to
those who satisfy the committee, and candidates who have ful-
filled all the requirements of the ordinary diploma with a high
degree of credit may be granted a Higher Diploma after a second
year of study, in which they must take up two of the following
University courses — advanced economics, public finance, methods
of statistics, political philosophy, housing and town-planning.
They must also submit a thesis embodying the results of an
original investigation into economic or social conditions, con-
ducted during the period of study under the direction of some
member of the committee. Three of those theses are now
before us.

It would be easy to suggest extensions of this scheme of
social study, and even to propose improvements, but, taking it as
a whole, and remembering that the practical work is only possible
through the co-operation of officials and manufacturers who have
their own daily business to attend to, it is most admirable. One
would have much more confidence in the efficiency of municipal
officials if one knew that they had all gone through some such

. THE EOOISOMIC JOUEUAL. [JXJHB

course of instruction in theory, history, and practice. Such
instruction is just as necessary for the clerical or administrative
staff as a knowledge of the principles of hygiene is for the sanitary
inspector. Indeed, one might even go farther, and suggest that
it would be extremely useful if Professor Ashley and other
teachers engaged with the practical side of economics would draw
up a similar course of training for civil servants. Adminstration
becomes inconceivably more efficient when the administrator has
a first-hand acquaintance with the material with which he has
to deal as well as with his office-methods and precedents.

Whatever may be the results on administration, there is no
doubt as to the effect which this carefully-planned course of
instruction has on investigation. Each of these three theses is of
a high order of merit, and shows that the writer has approached
her subject with sympathy, has accumulated her facts with care,
and has criticised them with a keen sense alike of " their
sufficiencies and their deficiencies. They are also well written,
which, unfortunately, is much more than one can say for all post-
graduate or, indeed, all professorial work. The arrangement is
good, and the language is terse and clear. These same good
qualities, however, make it difficult to summarise the reports.

Miss Thomson’s object is to show the effect produced on
children belonging to the lowest class of society when they are
taken out of their surroundings and are properly fed and trained.
Out of 265 cases investigated, 192 turned out satisfactorily, forty-
four were doubtful, and only twenty-nine unsatisfactory, of which
thirteen were “mental ” cases or “almost deficient.** Even in a
batch of forty cases where the children were taken into institutions
at the late age of eleven or twelve, tw^enty-eight were entirely satis-
factory. The records cover, as a rule, at least four years after
leaving the Home, and Miss Thomson’s standard is so high that
on p. 32 a girl who finished by being a matron is classed in the
category of unsatisfactory cases. The conclusion is that environ-
ment is more potent than heredity in determining the fate of the
slum child, contrary to the opinion of an egregious Mr. Mudge,
who unconsciously travesties whatever is sound in eugenics and
holds that “in social life the environment is the product ^f the
individual,’* Miss Thomson’s final wnrds are : “So our race of
hereditary paupers and criminals will form, as generation follows
generation, an ever-increasing minority, until eventually — who
knows? — they may be crowded out altogether by the mere force
of a beneficent environment.”

The Birmingham Education Committee gave Miss Winder

19131 BIBmN0HAM STUDIES IN SOCIAL ECONOMICS 275

special facilities for her investigations, so that she is able to give
abundant particulars as to the condition of the families where the
children require to be fed at the public expense. The evils of
casual labour are once more made evident ; the benefit to the
children from proper feeding is again displayed. Her most
important practical conclusion is that the system of selectng
children entirely by wSy of a fixed poverty scale is unsound, and
that there should be the closest co-operation between the school
medical service and the canteen committees. Her general view
of the problem of school feeding is worthy of quotation : “ The
greatest danger, perhaps, of a public provision of free meals
is that they act as a salve to the conscience of the community
who see the children being fed, and, thinking all is well, look no
further. The meals themselves are only a palliative ; the real
solution of the problem of the ill-nourished child can only come
very slowly with more knowledge and better* conditions in the
homes, with proper provision for times of sickness and for widow-
hood, and with some solution of the problem of unemployment.*’
Miss Ashley first discusses the nature of State Socialism and
its relations to Conservatism, and briefly sketches its history ;
then she reviews Bismarck's character, and traces the develop-
ment of his opinions. In the second half of her thesis she deals
with the early history of insurance in Germany and with the
provisions and principles of the Bismarckian legislation, com-
pares German and British insurance legislation, and discusses the
relations of insurance and self-help and of State action and
charity. This is a study of an entirely different kind from the
other two, but it is at least as good. The historical summaries
are both full and concise, the treatment of Bismarck’s character
is illuminating, the exposition of the insurance laws plain and
lucid. Occasional flashes of humour light up the writing. The
time is not yet for a final judgment of Bismarck and his policy,
but, as Professor von Schmoller says in his preface, and Miss
Ashley shows in more detail ; “There was always in his heart a
feeling of noblesse oblige tow^ards the lower classes, and a con-
viction of the social mission of the monarchy to protect them
against exploitation by the upper classes; and, beneath' kll this,
was an undercurrent of dislike of the money-making bourgeoisie.
. . . An important factor in determining the scope and character
of the whole body of insurance legislation was Bismarck’s desire
to carry out the great undertaking rapidly, and, in any case,
during his own lifetime.”

Henry W. Macrostt

276

THB KCOKOMXC JOUBNAL

[JUNE

Ge9<^hichte dee Sozialismus in England. By M. Bebb. (Stutt-
gart : Dietz Nachfolger, G.M.b.H. 1916. Pp. xii4-512.)

Wb do not know whether the author is acquainted with the
advice of the late Professor Brewer that the best way to study
history is to go to biography. There is a good deal of truth in
the statement, even for general history, but in the case of the
history of movements it is especially valuable. Herr Beer has
adopted the advice in principle. His book shows clearly the influ-
ence of the great and the small leaders on the development of
Socialism in England —men such as E. C. Jones, George Holy-
oake, Samuel Kjdd, to name but three. The English pioneers of
Socialism may not be placed by the side of Marx or Lassalle, but
certain it is that in their own country they were not without honour
or success. Particulars of their lives are scattered about here and
there. Herr Beer has, we believe for the first time, gathered the
material into a whole and worked it around one central theme —
the history of Socialism in England.

Students owe a debt of gratitude to him for the work, seeing
that there is no comprehensive treatise on this most interesting
subject. Our only regret is that it should have been left to a
German to supply the need. But this is no reflection on the
author, who has done his work thoroughly and scientifically.
The book is divided into three parts as follows : (1) from 1750 to
1824, (2) from 1825 to 1854, and (3) from 1855 to 1912. The
story is told in a business-like, straightforward manner, without
any attempt to put forward original or new-fangled ideas. Par-
ticularly good is the section dealing with the Ghartist Movement.
The author’s standpoint — and this must not be left unmentioned —
is confessedly Socialistic. (Is not the book priipited by the well-
known Stuttgart firm which specialises in the production of
Socialist literature?) This is to the advantage of the work. If
we are to have a presentation of the growth of the Socialist move-
ment in England, it is best that it should come from a Socialist.
But let us add that this does not mean that the story is one-sided,
extremist or exaggerated. Herr Beer is, it is true, a Socialist
(he was the London correspondent of the Vorwdrts from 1901 to
1910) ; but he is also a scholar, and the book is worthy of the best
traditions of German research. Herr Beer has gone to the sources,
not neglecting the general literature of each particular epoch. BQs
quotations, of which there are many, are, of course, in German.

The very straightforwardness of the book leaves little room for
criticism. We have tested it throughout and have not met with

1913] KALdVY: LB PBUPLB AHaiiAIS AU XIX® SifeCLB 271

any glaring errors ; on the contrary, the author shows an under-
standing of English conditions, both in the present and the past,
which is commendable. When he says that the year of the dis-
appearance of the yeoman was not, as Marx held, 1760, but 1825,
we doubt whether it is at all possible to fix any year definitely,
though we should be inclined to favour the earlier period, if some
date must be chosen.

A serious thing in the book is the number of misprints. The
author seems to be aware of them, but he has not seen them
all (e.g., p. 405). We hope they will all be removed in the
English edition, which, we understand, the author has in prepara-
tion, and which is to be somewhat larger than the German.

M. Epstein

Histoire du peuple anglais au X/X® sihcle. Vol. I., U Anghterre
en 1816. By Elxe Halt^wy. (Paris : JHachette. 1912.
Pp. 615.)

Professor Hal6vy*s book covers tbe whole range of social
activities : politics, economics, religion, and the arts. Economic
students will be mainly interested in Book II., La socUU
iconomique. The book is more than a work of reference, but the
small space, 174 pages in all, into which subjects so huge as
agriculture, industry, transport, credit, taxation, and the Poor
Law have to be fitted, makes it impossible for the author to add
very much to our knowledge on any particular subject. As a
general work, the English student will pronounce it useful,
although, being a French publication, it contains no index. The
reader already familiar with Prothero’s English Farming, Man-
toux*s Industrial Revolution, and the historical writings of Tooke,
Jevons, Andreades, Sidney Buxton, and the Webbs, will know
in advance what the author has to say. But the book is a chal-
lenge to Englishmen to write for themselves their own economic
history during the nineteenth century, and doubtless some have
already the challenge in their pockets. There are some interesting
pages (298—300) and some valuable references (299, note 1) on
the subject of the licenses issued on either side of the Channel
since the period of Napoleon’s Continental system. To these one
would now add the name of Professor Eugen Tarle, of Peters-
burg, although his work, being in Russian, is inaccessible to most
of us except through the French medium of an International
Historical Congress. For closeness of research Professor Hal^vy’s
book cannot claim to rival the chapters on economic history in the
No. 90. — voii. xxiiT. V

278 BconroMio [jtthb

kter TOlumes of tho Cambridge Modern History, chapters which
form refreshing oases .in that desert of crowded dullness.

C. E. Fat

The York Memorandum Book. Part J., 1376-1419. Edited by
Maud Sellers, Litt.D. (Surtees Society. Vol. 120. 1912.

Pp. lxxxvi+287.)

The capital of the North has waited long for the publication
of its early documents, and both economic and general historians
will be most thankful to the Surtees Society and Miss Sellers for
this first valuable instalment. The Memorandum Book, which
“in form, matter, and date corresponds very closely with Letter
Book H of the City of London,'* is essential for comparison with
<rther mediseval records. The volume contains a number of
documents both earlier and later than the period 1376-1419. It
is particularly rich in gild regulations, for York was a city with
a very highly developed gild life in the fourteenth and fifteenth
centuries. Not that the gilds show any signs of independence of
the town authorities : there are no civic gild revolutions ; but
gild organisation is applied even to the tiniest groups of crafts-
men or traders. Whereas Norwich, a town of comparatively weak
gild life, had only six regular organisations in 1389, sixteen in 1440,
and twenty -six in 1448, the York records for about the same
period show forty-one gilds, varying in size from the tailors’ gild,
with 128 masters, to the wax chandlers’ with six and the founders’
with five. The earliest ordinances here printed are those of the
girdlers in 1307, which show a well-developed gild system with a
four-year apprenticeship. A century later the seven-year period
is practically universal. A fullers’ ordinance of about 1390
suggests that the mastery was at that time open to competent
men who had not been apprenticed : “Item que desormes chescun
qad estee apprentice ou servant en le dit artefice et soit trove
convenable a ocupier sicome mestre en mesme Tartifice,** etc.
(p. 72) ; but other interpretations are possible, and I have not
noted any other ordinance which settles the point. A difiiculty
arises from the use of “servant ** by the York scribes. Sometimes
it applies to anyone who is not a master (e.gr., p. 89) ; in one
case an English cross-heading to a Norman-French document
equates it with apprentice ; elsewhere it obviously applies to the
wage-earning “journeyman,** a term very rarely used at York.

The “servant,** in the later fifteenth century, at any rate, is
often hired by the week, and from an earlier date we find refer-

IdlSi] SBX<LBES ; f H» YOBK. MBMOBJUmtm BOOK 279

enceH to ** taskwork.!* The constant struggles to prevent men
working for two masters, and to force them to work in their
master^s shop only skinners, p. 63, sadlers, p. 89: both

sets of ordinances undated), show how difficult it was to maintain
what are usually called “typical gild conditions/* and how easily
the hired man might become a home-worker if gild rules were
relaxed. In the fifteenth century we get the skinner’s “servand *’
“that wyrkys a peny worth work for a penny, and wyll noght
be governed at the serchyng of hys work be the serchours and
maisters,** who is to be fined. He is surely either a home-
worker or a short-hired man like those Norwich “servants ’* in the
early fourteenth century Book of Customs, for whom “there
masters are not answerable ... for that they are not of their
mainpast because they receive a penny a day for a penny of
work.**

There is no evidence of permanent journeymen’s organisa-
tions, but the cordwainers, about 1435, complain that certain
servants — inspired by aliens and other outsiders — “sine causa
jasta recusant gubernari per statuta et antiquam regulam artis
predicts, ** and “faciunt conventicula et congregaciones illicitas
et confederaciones prohibitas ... in numero magno, contra
magistros sues quibus servirent, contra bonuni usum civil atis
hujus, et in contemptu regis*’ (p. 191).

The documents contain abundant information on other points
of special interest to the media>val economic historian, but of less
interest to the modern economist — such as the gradual dissolu-
tion of the merchant gild, the economic position of women in the
mediaeval town, “overlap” disputes among gilds, the admission
of strange craftsmen to gild privileges, the policy of the city
towards runaway villains and aliens, and the close connection
between gild life and pageantry. The modern economist may not
even care to know that the saucemakers and sellers of Paris
candles were specially interested in that pageant “in qua repre-
sentatur quod Judas Scarioth se suspendit et crepuit medius”
(p. 166). The media?valist, on the other hand, will note with
interest that there was not at York that concentration of traders
in Poultries, Milk Streets, and Ironmonger Lanes which one finds
in so many greater mediaeval cities. There were, in any case,
few trades in York big enough to dominate a whole street.

Profound gratitude to the Editor is linked with a little regret
at her insistence on dividing principal sentences by commas.
“Certain boroughs, however, as early as the reign of Henry II.,
had obtained the right to treat freehold property in the same way

V 2

280 the economic JOUBNAIi (JUNE

as personal, York was one of these, it became a matter. of first
importance that a good title should be secured,’* &c. There are
many such sentences. The Index is not quite perfect, as it should
be in a book of this kind. There are two mistakes in the five
entries under ‘Tlapham.** But there is no reason to think that
this is an average proportion of error, and one of the mistakes
is only the still very common confusion of Claphams with
Chapmen.

J. H. Clapham

Weibliche Diensthoten und Diensthotenhaltung in England, By
Dll. Lisa Boss. (Tubingen : J. C. B. Mohr. 1912. Pp.
viii-f 99. 3 marks.)

This little book describes the conditions of female domestic
service in England, institutes a comparison with Germany in
this respect, and draws some general inferences. It makes no
claim to solve the servant problem, and very little attempt to
forecast the future.

The writer examines the motives underlying the practice of
keeping domestic servants, and finds four factors at work. The
housewife may help her husband in breadwinning, and employ
a servant to replace her in the home. Or she may delegate her
household duties in order to devote her time to the education of
her children, to social w^ork, or merely to culture and recreation.
Again, the mistress of a house may employ a servant, or a given
number of servants, simply to conform to the standard adopted
by her class. Lastly, she may keep any number of servants as a
mere matter of luxury. Between the motives at 'work in the last
two cases it is not easy to draw a definite line.

It is clear that the practice first mentioned is economically
productive, and directly so. The second, in the majority of
cases, is indirectly productive, and therefore economically sound.
In the third class of cases we are dealing with conventions which
it is difficult to criticise. The fourth must be unconditionally
condemned. Where the energies of women are set free for no
useful purj)ose, we can only get national waste.

Dr. Ross is of opinion that the second factor is the more
predominant in Germany, while the third operates more strongly
in England. She supports this view by the fact that technical
improvements and labour-saving appliances in the home are
immediately followed by a reduction in the number of servants
in German households; while in England the correspondence

1913] POFPKB : DUS AXiIiaBUBUm BiiHBPFDICHT 281

betweeu the amount of work and servants employed is much less
marked, showing that the practice is more a matter of custom
than of need.

In England the proportion of servants kept has always been
greater, their wages have always been higher, and their condi-
tions better than on the Continent. The lowest wage, e.gf., paid
to cooks and parlourmaids in London is well above the average
paid anywhere in the G-erman Empire. In England, too, the
domestic servant is a much more independent and detached indi-
vidual than in Germany. Domestic service is, indeed, in a
transition stage everywhere ; it is losing its personal character,
and tending at last towards the condition of free contract which
exists in other occupations. England, which has been half a
century ahead of the Continent in all matters affecting domestic
service, is naturally in the van of this movement also.

The servant problem is doubtless not to be solved by the arm-
chair economist. Still, it is a pity that the thoughtful analysis
of the early chapters of this book was not followed up by a
consideration of the future of domestic service on the basis of
free contract — a development which is imminent. The WTiter
has deliberately restricted her inquiry to household servants in
direct personal relations with their employers, and therefore
leaves out of consideration the whole body of hotel, club, and
institution servants. These are, however, much more highly
organised than the rest of their class, and have already achieved
the impersonal relation to which all are tending. A little more
consideration of their conditions would have repaid study, and
might have indicated the lines on which a solution of the servant
problem may be sought.

H. Ebinhbrz

Die allgemeine Ndhrpflicht als Losung der sozialen Frage, By
Josef Popper-Lynkeus. Dresden ; Carl Eeissner. 1912.
Pp. xvi + 813.

There have been many suggestions put forward for the
amelioration of the world and the improvement of social con-
ditions. Louis Blanc’s, Proudhon’s, Henry George’s, Eichard
Bellamy’s, Franz Oppenheimer’s, are a few that are well known
to Economists; and now comes Josef Popper (Lynkeus) as the
latest prophet of the golden age. He has w^eighed his precursors
in the balance, and has found them wanting. Hence his own
scheme, in which he appears to place exceeding great faith.

282 TOE ECONOMIC JOUBNAIi [JUNE

, Jit would be idle to assert that his considerations are not
without value or that his suggested scheme lacks interest. But
it seems hardly necessary to have expatiated upon it at such great
length. Surely one-fourth of the eight hundred odd pages would
have amply suflSced. But the author is fond of a good fight ; he
has jousts with the sociologists, whom he just tolerates, and with
the economists, whom he positively despises. In fact, he holds
the view that ecopomics is only a pseudo-science, and he devotes
many pages to prove this thesis. Almost every German and
Austrian economist of note is quoted and slashed about, and
we are bound to confess that this part of the book is not unin-
structive. The author, however, wishes his work to be looked
upon not as a scientific piece of reasoning, but as a programme
pure and simple.

It is an attractive programme. Herr Popper starts out with
what is undoubtedly one of the most tragic facts of modern
economic life — the uncertainty "as to their livelihood by which the
great mass of workers are weighed down. His axiom, therefore,
is that every state should see to it that each of its subjects is
assured a minimum of comfort, so as to be placed in a position
of economic security, no matter what happens.

This minimum shall include food, housing, clothing, medical
and nursing attendance, and also burial. To provide for these
wants there shall be instituted an Industrial Army of men and
women, parallel with the existing military forces, and rec^&ited
in the same manner as these are — by corscription. Every man
and woman in the state will have to serve for a number of years
in the Industrial Army, giving up a span of their life to the state,
as the soldier in training does to-day.

Everything produced by the Industrial Army shall be divided
in kind among all the citizens according to their needs. But how
are these to be determined? Our author is a little vague on this
point. Physiology, he says, makes it abundantly clear how much
food, and of what kind, any person requires for perfect health.
So much the state shall give him as his minimum. And as for
housing, “we know from researches in hygiene of what size
healthy dwellings should be, and how constructed.”

But suppose that not sufiicient is produced for the minimum
of all ? The author has two answers to this possibility. In the
first place, if it should be necessary to suffer hunger, then all
must suffer alike. In other words, the general minimum must
be lessened by an equal amount in every case. He feels, how-
ever, that that is not the ideal way out of the difficulty. Hence

1013 } FOPFBft : OIB igEtXiQBlCBlBE 083

hk secontd proposal : the stjlile shall limit the number of births.
l!!he method of achieving this end is certainly original; readers
■will find it in the last chapter of the book.

Side by side with the work of the Industrial Army, private
undertakings shall be allowed to exist, but they are to produce
only luxuries, i.e., that which is over and above the minimum
standard. Here the present economic order shall continue, with
competition, wages, strikes, lock-outs, and so forth. When you
have served your time in the Industrial Army you may follow any
calling you choose. Of course, seeing that every citizen will have
provided for him the minimum of existence, wages will tend to be
lower than they are now.

This, in brief, is the two grains of wheat hidden in the two
bushels of chaff. The scheme seems an earnest attempt at a
solution of the social question, and not a few people will agree
with the author’s fundamental principle. The difficulty will be
concerning its realisation. Nevertheless, all social reformers
should find the book interesting. The second part, which is con-
structive, will appeal most to them ; while the first part, which is
critical, will not be without use for professed economists.

M. Epstein

NOTES AND MEMORANDA

THE DEPRECIATION OF BRITISH HOME
INVESTMENTS.— II.

Thr tables published in the Economic Jocrnal of June, 1912,
are brought up to date below by the addition of the figures
for 1912.

Table I.— (Line A of Diagram).

Dividends and Mean Prices. BRITISH RAILWAY DEBENTURE STOCKS.

1876

1881.

1886.

1891.

1896.

1901.

1906.

1911.

1912.

1. Caledonian

4()0

4-00

4*00

4-00

4*00

104-00

107*5

116-2

126-6

156-9

186-2

121-2

108-00

104*0

2, Great Eastern |

4-00

4*00

4-00

4*00

102*6

112-2

117-0

127-6

154-2

131*0

119-1

106*2

102-4

8. Great NortJieni ...j

4-00

105-2

4-00

114-7

4*00

120-5

8-00

100-6

3*00

119*1

8-00

100-0

8-00

92-0

8-00

81*6

8-00

78-8

4. Great Wc«lern " |

4-00

4*00

4-00

4 00

105*2

114-7

121-0

181-9

167-7

184-0

128*4

109*5

106*6

5. Lancasiiire and Yorkshire ...|

4-00

105-2

4 -00
114*7

4-00

118-0

4-00

128*0

8-00

119-7

3-00

100-5

8-OQ

91-8

3*00

8-00

7S*8

6. London and North Western j

4-(X)

106-7

4-00
115 0

4*00

121-7

4-00

182-7

8-00

119-9

8-00

108-2

8-00

96*8

8-00

84*2

3*00

80-9

7. London and 8outh Western ^

4-00

105-7

4-00

115*5

4-00

120*0

3-00

100-2

8-00

101-8

8-00

93-0

8-00

81*9

3-00

79-1

8. London, Brighton and South]

4-60

4*60

4*50

4-50

4*50

4*60

4*50

Coast \

114-0

124-0

130*5

148-0

173-7

147*4

188-0

120*2

116-0

{a) Manchester, Sheffield/

and Lines ... 1

i>, (b) London. Tilbury, andi
Southend ... ... ... 1

(a)4'50

(b)4-00

(b)4'00

(b)4-00

(b)4*00

(b)4-00

(b)4*00

(e)4‘50

113 0

107-6

110-0

128*0

154*1

180*5

! 117 0

106*1

118-6

10. North British |

4*00

4-00

4-fK)

4-00

8*00

8-00

8-O0

8-00

8*00

102-7

107-9

114-7

124-6

110 4

100*0

91-0

80*6

78-8

/Dividend, per cent.

4*10

4-05

8-86

3-55 i

8*55

i 3*55

355

8*60

Averse of 1 Price, „ ...

the Ton lYield, „ ...

106*82

113-87

ll9-6(>

123-80

1.39*16 1

118-86

1 107-78

96-95 j

98-74

3.17.1

3.11,8

8.7.9

8.2.2

2.11.0

8.0.0

1 3.6.7

8.14.0 1

8.16.8

lYears' Purchase ..

25-0

28-0 i

29-5

32-2

89*2

83*8

80*3

26*8 1

26-0

The dividends tire those paid during the year.

Table II.— (Line B of Diagram).

Dividends and Mean Prices. BRITISH MUNICIPAL SECURITIES.

1896.

1901.

1906.

19] 1,

1912.

1. Metropolitan Consolidated (1941)
3% Stock

121*76

101*37

98*75

89*26

87*66

2. Birmingham Corporation (1947)

3% Stock

8. Bristol Irrodeomable 3}% Stock

114*00

132*76

100*87

114*25

86*44

97*75

88*60

94*25

4, Cardiff (1935) 3i% „

122-81

106*76

101*87

97*00

96 00

5. Glasgow Irredeemablo 84 % ,,

135*26

118*76

107*37

102*12

100*00

6. Liverpool „ 3J% „

186*76

117*75

108*12

100*60

98*87

7. Manchester ,, 4% ,,

8. Newcastle (1936) 3i% „

161*12

132-06

123*66

114*69

111*76

121-37

106-60

101*26

97*87

96*76

9. Nottingham Irredeemable 3% ,,

117*12

100-37

90*44

87*87

86*44

10. Bradford (1946) 8i%

123*26 i

109*31

101*76

97*75

96*87

Average of ®

127*667

110*798

102*398

97*074

94*999

2.13.4 i

3,1.4 i

3.6.5

3.10.1

8.11.7

87*6

32*6

80*1

28*6

27*9

JTTHB, 1918] DBFBBCUTIOH OF BBITISH HOMB IBVBSTMBBTS 28i5
Ta&SiB III. — (Line 0 oi I>iagram).

Dipidtmis and Mean Prices: BRITISH RAILWAY ORDINARY STOCKS.

1. Caledonian

2. Great Eastern

3. Great Western

4. Lancashire and Yorkshire
6. London and North Western

6. London and South Western

7. London, Brighton & South Coast |

8. North Eastern “ Consols

9. North Staffordshire ...

10. Taff Vail

• I

•I

Average of J
the Ten

^Dividend, per cent.
Price ,,

Yield „

^ Years* Purchase ...

1696.

1901.

1906.

1911.

1912.

5-26

8-62

4-00

3*37

3*25

164-66

124-40

110-60

86-76

78-62

2-76

2*62

3-37

2-87

98-62

101-76

86-19

71*12

66-26

6-87

4-00

6-37

6-00

6-37

173-26

140-06

133-19

126-31

118-81

6-12

3-62

4-12

4-62

4-12

140-44

117*87

105-12

97*12

91*66

G-87

5-50

6-37

6-87

6-37

197*69

169-31

155-60

141-12

134-75

6-37

6-60

600

6-12

6-60

207-25

176-00

163 00

141-37

128-62

6-60

4-76

5*62

6-00

185*50

142-00

183 62

116-50

111-12

6-12

5-75

6-26

6-75

173-66

160-25

140-94

130-37

123-34

4-25

3-62

4-25

4-76

4-37

130-26

107-75

101-19

94-44

89*25

3-25

2-87

3-87

4-00

3-60

86-60

71-50

79-62

76-00

73-26

6-235

4*185

4-872

1 6-097

4-610

154-762

131 -089

119-797

107*910

101-407

8.7.8

3.3.10

4.1.4

4.14.6

4.10.11

29*6

31-3

24-6

21-2

22-0

The dividends are those paid during the year.

Table IV. — (Line D of Diagram).

Dividends and Mean Prices. FOREIGN AND COLONIAL RAILWAY
OBLIGATIONS.

1896.

1901.

lfK)6.

1911.

1913.

1. Northern of France 3% Obliga>
tions

960

91*1

91-1

84-1

83-4

2. Grand Russian (Nicolai) 4% Bonds

99-0 ,

97*1

76-5

89-1

85-6

3. Pennsylvania 4i% Gold Bonds .

113*0

111-6

104-8

104*1

102-7

4. Chic. Mil. and St. Paul 4% Gen.
Mort. Bds

95-2

116-0

lH-9

104-1

101*6

5. Buenos Ayres Gt. Southn. 4%
Deb. Stock

119-6

111-0

106’2

102-2

101-0

6. Central Argentine 4% Deb. Stock

7. Mexican Railway 6% Perp. Deb.

Stock

110-1

102-9

106-S

101-4

100-3

131-1

132-7

144-0

139-6

137-9

8. Nitrate Railways 6% 1st Mort,
Bds 1

88-6

97-7

105-2

106-2

106-0

9. Canadian Pacific 4% Con. Deb.
Stock I

105-2

110-1

110-9

104*4

102*2

10. Atlantic and St. Lawrence 6%
Shares

152-5

160*6

167-7

150-1

146-1

Averse of

110-92

112-»7

111-38

108-48

106-67

4.0.3

3.18.9

3.19.11

4.2.1

4.8.5

24-9

26-4

26-0

24*4.

24-0

286

XHB BOOKOlflO JOtTBUAI*

[nnm

Ti^BLV V.— (Line of BiagriJOi).

"DiddmdB and Mem Prices. FORBiaN AND OOLONUL RAILWAY
OBDINARY STOCKS AND SHARBB.

1896.

1901.

1906.

1911.

191 S .

1. Canadian Pacific ...|

2 00 i
5806

6*00

104*60

6-50

184-94

10-00

227-69

10-00

258*62

2. Chicago, Milwaukee/
and St. Paul ...\

400

6-00

7-00

5*00

72*37

171*81

178*60

122-94

111-00

8. Illinois Central |

6*00

93-69

6*00

143-81

7-00

179*81

7-00

148*44

7*00

184*62

4. New York, Cent, and J

4*00

6-00

6*26

6-00

6*00

Hudson’s River ...\

96*06

160-50

146*12

111*60

116*81

5. Pennsylvania |

6*00

116*12

6-00

164-26

6*60

139*12

6-00

128-37

6*00

126*76

6. Buenos Ayres Great/

5*60

1 7-00

7*00

130*12

i 187-76

133*69

121*37

126-26

7. Buenos Ayres West ern|^

6-00

120-62

6-00

104*69

7*00

131*12

7*60

128*87

7*00

127*19

8. Central Argentine

2*60

64*25

3*76

66-87

6*00

116-87

6*00

107*44

6*00

107*31

(a) Rio Olaro San (

13*60»^

Q Paulo J

(b) Great Western of]

14-00

6*00

(a)

Brazil V

231*87

244-68

262-60

267*60

106*81

10. San Paulo ( Brazilian )|

14-00

195-62

10-00

161-50

12-00
207 19

13-00

209-66

18*00
284 50

Aver- /Dividend, por cent.

6*200

6-876

7*825

8-200

7*200

age of J Price ,,

117-878

143-886

167-786

166-818

144*736

the 1 Yield

6.6.2

4.15.6

4.13.3

5.6.8

4.19.6

Ten v. Years’ Purchase

19-0

20-9

21*4

19*0

20*1

Tho dividondR aro those paid in the year.

A slight error in the 1911 figures in Table V. has been cor-
rected. The diagram which appeared a year ago is brought up
to date on p. 287.

The added figures in no way alter the effect of those which
precede them. British Eailway Debenture stocks and British
Municipal stocks have continued their decline, and there is still
no sign of any change for the better. British Eailway ordinary
stocks have likewise continued to fall in price, though, through
strikes having reduced dividends in a higher ratio, “years’
purchase of dividends ” in their case shoTvs an incfrease. Foreign
and colonial railway debentures have declined, but to a smaller
extent than the corresponding British stocks ; while the rise in
“years’ purchase of dividends ” observable in foreign and colonial
railway ordinaries is due more to rise in price than to fall in
dividend. Thus the problem remains a double one— we have not
only to deal with a movement adverse to British home invest-
ments, but with one which foreign and colonial investments
share, if at all, only to a less extent.

288 THB Eomouic JOXJBNALi ' [jtJKB

The effect of ^‘redemption** upon the averages shown in the
tables, and therefore upon the lines in the diagram, has been
carefully looked into. Some of the investments in Tables II.
and IV.— British Municipal securities, and foreign and colonial
railway obligations — are either in process of redemption or liable
to be redeemed at future dates. A comparison of the prices of
these with the prices of the others in the same groups shows that
the effect of redemption is not, in any case, great, and as it
operates in both directions — in some cases raising, and in others
depressing, prices — the net effect upon the averages, and there-
fore upon the lines in the diagram, is negligible. So also as
regards the matter of “rights ” to new issues (to which reference
was made on page 224 of the former article), an examination of
the effect of not taking account of them in the tables has been
made, with the result that it is clear that to include them would
be extremely difi&cult, and that, even if it could be satisfactorily
accomplished, it would merely widen to some extent the space
in the diagram between the lines C-C and E-E. No alteration
of the diagram, therefore, is called for on account of either
“redemption *’ or “rights,** and its lessons remain unimpaired.

Professor Cohn, in the Economic Journal of December last,
mentions the previous article generally with approval. He finds
it “very justly maintaining** that the price movements of our
home investments cannot be attributed to the fortunes of our
political parties; “on the right track** when it says that the
Colonial Stock Act is not the cause of the depreciation, and when
it draws attention to the flow of British capital to other countries ;
and of the movements themselves he says, “these movements
in the various kinds of investments are accurately illustrated by
means of instructive tables.’* But he complains that the parallel
which he sees between the movements of British Government
securities and those of the securities of foreign states has not
been noticed by the writer.

Professor Cohn finds “the pith of the matter ** in the “identity **
of the fate of German, French, and English State securities. The
writer, on the other hand, finds it in the “exceptional** fate of
British home investments when compared with similar foreign
and colonial investments. Which field offers the better chance
of finding “the pith of the matter *’ — the “ State ** or the “other ’*
investment market — is no doubt open to discussion. Admitting
the great ^portance of the market for State securities, is it not
at least possible that the other markets, with their superior facili-
ties for grouping, and their comparative remoteness from political

1918 ] DBPBEOUTIOlf OF BBITISH HOMB INVESTMENTS 289

mfltiencses, afford the better field of study as liegards the past?
And when the survey is extended “to the future and to the coming
movements in prices/’ are we not likely to get the better guidance
from markets which possess these advantages? It is from con-
siderations of this kind that the waiter has been led to leave the
“State” market to others.

"Professor Eist, in the Revue Economique Internationale of
March last, expresses surprise that the previous article regarded
the depreciation of British home investments as exceptional, but
he entirely ignores the evidence cited in support of that state-
ment. The tables and the diagram require more consideration
than he seems to have given them. How does he explain, for
instance, the enormous difference between the two lines C-G and
in the diagram ? His article goes a long way to prove that
Prance has been very prosperous during the past fifteen years,
and that as a consequence French investors have been attracted
by her industrial and commercial issues. It is good that France
has prospered, but it does not follow that Great Britain has been
equally fortunate. There is, indeed, as will appear later, grave
reason to fear that she has not.

Other writers — notably Professor E. A. Lehfeldt, and M. Paul
Leroy-Beaulieu, the former in the Eoyal Statistical Society’s
Journal, and the latter in L* Economist c Frangais (of January
last) — have been dealing in different ways with the subject of
falling prices in the investment markets, and their writings are
of much interest. But they have not said anything which seems
in the slightest degree to shake the evidence of the tables given
above.

The conclusion reached, on other evidence, in the previous
article — that “the exceptional decline in the value of British
home investments synchronises with, and may be very largely
due to, exceptional competition, first in the iron trade and after-
wards in other manufacturing trades of this country ”—may seem
falsified by the many reports of general prosperity during 1912,
but signs are not wanting that, so far as the trades referred to
are concerned, the prosperity is apparent rather than real. No
figures — official or otherwise — are available whereby industrial
profits can be accurately measured ; but now and then light is
shed on the subject, and on October 5th last two speeches were
reported from which something may be learned. Mr. W. Peter
Eylands, at the ordinary general meeting of the Pearson and
Knowles Coal and Iron Company, Ltd., is reported as saying

2SK) ncommo ^bvmAh ,< [jvnm

that during the last few years he could not call to mind one
single new company carrying on a similar business being started
"in the iron and steel trade. He had known plenty of companies
go down, crushed, doubtless, by the burdens which had to be
borne by the industry. Two or three companies had closed down
during the last few months, tired of struggling, and had gone
into voluntary liquidation. No new company conld start with
any hope of success under existing conditions. ...” This points
unmistakably to a loss of capital and resources which, in any
general estimate of national prosperity, must written off
against the profit made by similar concerns elsewhere. The
other speech was by Lord Aberconway at the annual meeting of
the Sheepbridge Coal and Iron Company, Ltd., who gave figures
which showed that the pig iron output of that company had about
doubled during the past twenty years. The capital had, he said,
remained “practically the same” during that period, and the
dividend had “kept up.” If this condition of things applies to
our coal and iron trades generally, it w^ould seem that those of
our mining companies which remain at work are exhausting their
resources, and therefore what remain of the mineral resources of
the country, twice as fast as they were twenty years ago, without
improving their profits in doing so. Regarded in the light thrown
upon them by these two speeches, the Board of Trade figures,
whether we take them from “Iron and Steel, 1911” or from
other returns, are certainly not calculated to inspire one with con-
fidence in the strength of our manufacturing position, based as it is
so largely upon our mineral resources. A glance at the figures given
us bv the Director of the Census of Production shows how com-
pletely, if we omit trades occupied in housing, clothing, and
feeding the people, our industries are built upon our coal and
iron. How far we can find profitable employment for our people
if our iron mines fail us is problematical. We are, it is said,
more and more devoting ourselves to high-class manufactures,
and so long as that field is open to us we can, no doubt, provide
good careers for those who qualify themselves for such work,
even if we are compelled to import pig-iron. But meantime the
continued drift of both capital and labour to the colonies and to
foreign countries indicates that emigration presents to both the
expectation of a higher reward than is obtainable by remaining
at home — in other words, that competition is so severe in this
qpuntry that both capital and labour are running away from it.

A Stockbeoker

| 913 | AMBEICAH A<JBIO0LTOltAIi COMMISSION

. Ambbican Agbiooltubal Commission.

’ It has been announced in the Press that an inquiry is about
to be made on the Continent, and in the United Kingdom , into the
organisation of agriculture by a large American Commission, in-
cluding among its members delegates from most of the States
of the Union and from one or more of the Provinces in the
Dominion. They will arrive about July 8th in London, and sail
from Queenstown on the 18th. The origin, scope, and purpose
of the inquiry are set out in a Senate paper (Document No. 1071)
ordered to be printed on February 11, 1913. But even those who
have seen this Document, if they arc not familiar with the
sequence of events which led up to the appointment, of the Com-
mission may, I think, be assisted in understanding the real mean-
ing of the inquiry by the supplementary information which I now
offer to readers of The Economic Journal.

For the inception of the project it is not necessary to look far
back. Towards the end of Mr. KoosevelCs administration a wave
of new thought upon the social condition and economic needs of
the farming population swept over the United States. Its growth
was stimulated by the Conservation movement, the aim of which
was to call public attention to the reckless waste of the natural
resources of the country by exploiting capitalists, and to promote
legislation to restrain it. In the course of the discussion it was
frequently pointed out that by far the greatest national waste was
to be found in the depletion of the fertility of the soil. Already
the effect of bad Jausbandry was seen in the declining exports of
agricultural produce. In the next few years, unless some radical
change takes place, the United States will have to import some
of its staple foods. The rising cost of living — the most vital
question of the day in that country — is attributed by many to a
faulty agricultural economy, the chief defect of which is the
total lack of business organisation amongst those engaged in pro-
ducing the nation’s food. This disadvantage, under which these
workers labour, is accentuated by the high degree of perfection
attained in the organisation of other American industries, since
in their mutual transactions organised interests prey upon the
unorganised. Upon an unsound economic foundation no pros-
perous social life can be built up.

Whatever may be thought of such generalisations, it cannot
be denied that, despite its unique physical opportunities, American
agriculture, both as a social and as an economic force, is unnatur-
ally and unnecessarily depressed. The thinkers of the towns are

292 i?HB EooKomo jotruNlt [jxmB

becoming more and more alive to their ultimate dependenc^e upon
the welfare of the farmers, and for the first time since the indus-
trial revolution public opinion is beginning to give to agriculture
its proper place in the national economy. This is, I think, a
substantially accurate description of the state of facts which was
held to need the serious attention of thoughtful men in the United
States.

The first serious attempt to initiate a scheme of rural better-
ment was the appointment in 1908 of the Country Life Commis-
sion. This body held sittings, to which all and sundry were
invited to come and give evidence as to local agricultural condi-
tions, in almost every State in the Union. They published a
report which did not immediately lead to action, but set people
thinking. The daily Press and the popular magazines took up
the “back-to-the-land ” cry. The Federal Department of Agricul-
ture, the universities and agricultural colleges, the churches and
many other agencies of social progress, agitated questions of rural
econorny with increasing activity.

In April of last year an important and representative conven-
tion was held at Nashville, Tennessee, under the auspices of the
Southern Commercial Congress — an Association of public men
drawn from sixteen of the Southern States. Persuaded, I think
it may be said, by the eloquent advocacy of Mr. David Lubin, the
United States delegate to the International Institute of Agricul-
ture in Rome, those present came to the conclusion that a
reform in agricultural credit would practically solve ah the serious
difficulties which beset the farmer. The resolutions adopted at
this convention called for the apix)intment of the Commission, for
which the Uniled States Senate subsequently bespoke diplomatic
courtesies abroad.

The movement grew in popular favour. Each of the three
parties in the presidential campaign included agricultural credit
as a prominent part of their constructive policies. On December
7th, President Taft convened a meeting of Governors at the White
House to discuss the project, at which it was decided to commend
it to all the States. The appointment of delegates thereupon
commenced, and the Southern Commercial Congress set about
making the arrangements for the European tour.

Meanwhile economic thought, aroused by a state of facts
above indicated, progressed rapidly, and a mere inquiry into agri-
cultural credit no longer satisfied those who had adopted the new
conception of the proper place for the country’s basic industry.
Moreover, the ix)pularity of the project was being threatened by

1913] AMEBICAN AGRICULTUBAL OOkMISSION 293

doubts, expressed in^i^any quarters, as to whether agricultural
credit -a highly tecHbical subject on which there is abundant
and excellent liteJrature — was one which could be hopefully inves-
tigated by such a body as was proposed in a summer tour. It
was therefore decided by the Southern Commercial Congress to
instruct the Commission, instead of treating agricultural credit
as the dominant, if not the only, factor in the development of
rural life, to inquire into and report ui^on the entire organisation
of the farmers* business in the countries to bo visited. This
change of procedure was approved by Mr. Taft, the then Presi-
dent, and was strongly endorsed by President Wilson and ex-
President Eoosevelt.

Eeaders of The Economic Journal will be chicly interested
in the concluding ten days of the European tour, which will be
spent in the United Kingdom. Had the inquiry been, as origin-
ally projected, restricted to agricultural credit, Jittle W'ould have
been learned'-^ these islands. Indeed, there is only one issue
within the scope of their inquiry, broadened, as has been explained
above, upon which the Commission is likely to obtain valuable
assistance. On this issue a few words may be usefully added.

By the time they arrive in England, the Commission will
have learned the essential difference between the agricultural
economy of the Continent, on the one hand, and that of the
United States and other English-speaking countries on the other.
It lies in the organisation of the farmers* business. In the former
countries farmers have learned that methods of combination can
be applied to agriculture as to all other irrii)ortant industries,
provided the co-operative is substituted for the Joint Stock system
of organisation. That lesson has been gradually learned by some
of the farmers of the United Kingdom, hrst in Ireland, then in
England, and later still in Scotland ; it will also have to be learned
in the United Stat<^. It is highly probable Ibat (ho chief subject
of inquiry over here will be the metliods by which the English,
Scottish, and Irish organisation societies are endeavouring to
develop agricultural co-operation among the fai'mers of these
islands.

Horace Plunkett

Ko, 90. — VOL. ZXIII.

294

THE BCOKOMIO JO0ltN4Xi

[JUNE

The Genebal Stbikb in Belgium,

The general strike which took place in Belgium from April
14th to 25th, 1913, was entirely political in character. It arose out
of the feelings of exasperation which animated the Liberal and
Socialist Of>position, after the elections of June 2nd, 1912, had
resulted in a triumph for the Catholic Government so overwhelm-
ing as to surprise even the victors. The mot d'ordre of a “general
strike for universal suffrage” went forth from the Socialists of
Hainaut; and an Extraordinary Congress of the Labour party,
which was held on June 30th, 1912, accepted the idea with
enthusiasm, entrusting the arrangements for its execution, in-
cluding the choice of a suitable date, to a National Committee.

As soon as the Parliamentary Session had opened in November,
notice was given by the Socialist deputies of a motion for the
amendment of the* Constitution, by which universal adult suffrage
should be substituted for the system of plural voting actually in
force. The motion was not debated until January. The Govern-
ment w^as able to command a majority sufficient to carry the
adjournment of the whole question, and even refused to appoint
a Commission of Inquiry, as proposed by Monsieur Hymans, the
leader of the Liberal Opposition. Not till then did the National
Committee decree a strike, to begin on April 14th, 1913. The
Mayors of the principal provincial towns thereupon undertook to
mediate between the Prime Minister and the leaders oi the Labour
party. They expressed belief that the Government would be
willing to appoint the desired Commission, if the threat of a
strike was withdrawn. Accordingly, the Strike Committee
resolved on May 8th to abandon the strike. The Prime Minister,
however, did not consent to extend the scope of the proposed
Commission to the Parliamentary franchise, and announced his
intention of confining it to the amendment of the municipal and
provincial franchise. Discontent broke out with renewed force
in Socialisti circles, and in spite of the opposition of accredited
leaders such as MM. Vandervelde and C. Huysmans, the Congress
held on March 24th resolved, by a large majority, on a strike to
begin on April 14th.

I have called attention to these preliminary delays in order to
show that although the strike had long been agreed upon, the
preparations were hampered by successive periods of uncertainty.
The only resources available were the workmen’s individual
savings and the subscriptions of a few middle-class sympathisers.

1918] TEK iK BBLOltJM 295

It is a matter of common knowledge that the Belgian Syndicats
ouvriers have no reserves at all comparable to the funds of English
Trade Unions; nioreover, for fear of exhausting their fighting
forces for a long time to come, it had been decided that the ordinary
funds should not contribute to the expenses of the strike.

The period of time immediately preceding the stoppage of
work is particularly interesting from the point of view of social
psychology. An intense and widespread uneasiness made itself
felt throughout a great portion of the population, especially in
the large towns and industrial districts. Catastrophes, violence,
and terrorism were predicted by some ; others were sure that the
strike would be a miserable failure ; all, whether openly or secretly,
took elaborate precautions. There was not a middle olass house-
wife but laid in a stock of coal and provisions, and many supplied
themselves out of all proportion to the danger. In fact, there was
a very extraordinary panic before the event. Manufacturers, too,
tried to guard against the consequences of tlie strike by such
arrangements as were necessary to meet a temporary stoppage,
and by precautionary measures for the p"*otection of their goods
and premises. It was these precautions which, to a certain extent,
averted the disasters which a sudden, unforeseen stoppage could
not have failed to bring about.

We may venture on the assertion that the strike attained the
maximum proportions anticipated by anyone acquainted with
industrial conditions. No official statistics were published, and
none need be expected. The “Ministere de ITndustrie et du
Travail,” which keeps a careful record of the numbers concerned
in stoppages, and of all the incidents of ordinary strikes, decided
to leave out of account a strike whose aim was purely political.
We must therefore fall back on the statistics published by the
two parties, which cannot, from the nature of the case, be accepted
as impartial. Taking the most trustworthy calculations, the total
number of strikers at the outset was nearly 300,000, and the
maximum of nearly 400,000 was reached on April 19th.

As the total working population of the country is estimated
at over a miUion, those who expected a universal stoppage could
fairly declare that the strike had failed. But it is clear that
neither the small independent workers, nor those engaged in home
industries or in agriculture, can have contributed any appreciable
contingent to the body of strikers. Nor, with the exception of
the port of Antwerp, were the transport industries much affected ;
there was no stoppage of the State railways, nor interrruption in
the tramway services ; and the public gas and electric works

X 2

296

THB ECOKOMIO 30*UENAL

[JUNE

scarcely suffered. On the other hand, all the great manufactures
were paralysed. If we estimate that these absorb 700,000 work-
people, the strike certainly withdrew one half of them. The
stoppage was practically universal in all the collieries in the dis-
tricts of Liege, Charleroi, in the midland districts and in the
Borinage. The great metallurgic factories were reduced to com-
plete inactivity or to the most trifling output. Even working-
class groups, which were not ofi&cially connected with the Labour
party, and which do not always obey the word of command, such
as the glass workers of Hainaut, and the woollen unions of
Verviers, threw in their lot with the strikers. The Brussels
compositors, after refusing to stop work, were drawn into the
movement after the second week — though the only large daily
paper which was prevented from going to press was the Peuple,
the organ of the Labour party.

Although, therefore, the economic life of the country was not
brought to a standstill, and although the immediate needs of
the nation were supplied, yet large-scale production was com-
pletely arrested. The industrial centres of Liege and Charleroi
offered an impressive spectacle — smokeless chimneys, noiseless
workshops ; the Black Country had become green and clear, but
over it brooded the silence of death. The port of Antwerp, with
only half its usual consignments and gangs of casual lightermen ,
seemed an organism whose life was ebbing from it. All retail
trade, and, oddly enough, the life of the streets, the Irafiic of the
restaurants and cafes, the patronage of the picture theatres, were
visibly diminished.

The records of the number of railway carriages in use on
State railw^ays, which are published weekly, afford a remarkable
testimony to the state of affairs : —

Week. No. of carriages employed in transport of

Coal and Other

Coke. Goods.

April 14—20, 1912 27,694 87,613

April 13—19, 1913 7,200 70,402

Decrease 20,494 17,211

April 21—28, 1912 26,280 88,914

April 20—27, 1913 9,145 70,660

Decrease 17,086 18,364

Total decrease in the fortnight 73,154

It would bei interesting to know what decrease took place in
the number of workmen’s weekly passes ; but this, unfortunately,
the Ministry refuses to divulge.

1913] THE aSKBlKAL ST^RIKB IN BELGIUM 297

It would be premature to attempt any estimate of the direct
losses suffered by the working classes and by trade. The figures
of Fr.10,000,000 to Fr. 12 ,000,000, lost in wages during the first
week, would appear to be a moderate estimate. The indirect
losses are incalculable ; retail trade has been suffering for two or
three months, and export trade has received a serious blow, the
effects of which have yet to make themselves felt.

The political consequences of the strike have been considerable.
From April 16th, when Parliament reassembled, the strike com-
pletely monopolised its attention. It was hotly and continuously
discussed. And the Prime Minister, reverting to a previous
declaration, eventually admitted, in the course of the debate, that
the Commission which would be appointed to discjss the amend-
ment of the municipal and provincial franchises, might also
occupy itself by “talking** of the parliamentary franchise. The
point was skilfully taken up by the Opposition, and the declara-
tion was considered satisfactory by the Socialists. It was made
the subject of an order-of-the-day, which, while condemning the
general strike, nevertheless aroused a hope that the desired
amendment of the constitution was in sight. A Socialist Congress,
summoned as a matter of urgency on April 23rd, decided on the
resumption of work, which took complete effect on the 2^th.

There can be no doubt that the Labour party emerges from
this experience with enhanced reputation. It has given evidence
of a remarkable control over the working population, and ability
to enforce discipline and exact considerable sacrifices for the sake
of political reform. It has given proof of conspicuous organising
power, and has gained much prestige from the fact that the strike
remained everywhere from first to last completely peaceable, in
spite of the fact that the entire country w^as covered with troops.
Monsieur Vandervelde was justified in the statement that the
strike had surpassed all the hopes that had been entertained.

The impartial observer, however, cannot fail to think with
apprehension of the future. It is clear that the temptation to
repeat this kind of experiment will henceforth be very strong ; and
we may well ask with anxiety what irreparable misfortunes such
events might not bring in their train, if they were frequently
repeated.

E. Mahaim,

Correspondent of the Royal Economic
Society for Belgium.

Liege, May, 1913.

298

THB BCOKOUIO JOtTBNAL

[JUNB

The Eailway and Canal Tbaffic Act, 1918.

After a delay extending to almost two years, this Act, which

intended to redeem the promise made by the Government to
the railway companies at the time of the Eailway Strike, has
been passed. For a number of years the railways have suffered
from steadily rising costs of working, and owing to the conditions
laid down in the Eailway and Canal Act, 1894, they have not
been free to advance rates to meet the growing costs. The rail-
ways have gradually become less and less profitable, and have
found an ever-growing difficulty in raising the capital necessary
to an expanding business on terms which would make its employ-
ment profitable. Improved methods of working have done some-
thing to relieve the situation, but the demands of labour have
kept pace with such improved methods, and even threatened
to absorb more than the whole gain.

It was evident that some modification of the Act of 1894 was
necessary. That Act, compelling the railways to justify any
increased rate by proving that the amount of the increase was
reasonable, has been interpreted by the Eailway and Canal Com-
missioners in a narrow way. Practically the only proof accepted
has been evidence of increased costs of working the particular
traffic. Except in the case of a commodity like coal, which is
worked in train-loads, the requirement is almost impossible to
fulfil. The result has been that rates have become stagnant. The
railways will not, or .rather dare not, lower them, unless the
results from so doing are practically known.

To some extent the new Act should relieve the position. For
the future, in so far as increased expenses are due to improve-
ments in the conditions of employment of their servants, it will
only be necessary for the railways to show that the advances in
rates are to meet such expenses, and in the total are not more
than reasonably sufficient for the purpose. At the present time
wages account for about 45 per cent, of the railways’^ annual
expenses. So, if rates can rise and fall with wages, there will
be far less reason for the railways to hesitate about lowering rates
experimentally. To some extent the Act should restore the
elasticity to rates, which they have lost since 1894.

Whether it will do so or not depends largely on the interpreta-
tion that the Eailway and Canal Commissioners put on two condi-
tions in the Act. Clause 1 (d) lays down that the proportion of the
increase allocated to the particular traffic must not be unreason-
able. What proof that it is not so the Commissioners will require

i9ia]

BAIliWAT TKAHSFOBTATION

299

it is impossible to say at present. Then the Commissioners
are authorised to take into account “any circumstances'* that are
relevant to the determination whether an increase of rates or
charges is or is not greater than is reasonably required. This is
understood to mean that economies due to improvements in
methods of working or in appliances may be taken into account.
Thus the rates of locomotive men’s wages have advanced about
16 per cent, during the past ten years, but owing to larger engines
the total expenditure on locomotive men’s wages has not increased
as fast as the growth of trafl&c. It is conceivable that the Com-
missioners might decide that this was a circumstance which they
might take into account to the extent of ruling locomotive wages
off the bill. If that were done, then it would be v^ry like putting
a premium on bad working.

A very great deal turns on the way in which the Commissioners
settle the questions raised by these tw^o clauses. Given a broad
commercial interpretation, the Act may do much to restore elas-
ticity to rates, and if it does this it will be good for both the
railways and trade. Given a narrow interpretation on the lines
of that given to the Act of 1894, then this Act will do little to
improve the position. It will not be long before the position is
known with certainty. The railways have given official notice
of their intention to increase rates for merchandise by T per cent,
from the 1st July. There are clear indications that in many
cases the increases will be resisted, and doubtless the Commis-
sioners will be called on to decide between the contending parties.

W. Tetley Stephenson

A Keply to Mb. Acwobth’s Eeview of Professor
C. L. Kaper’s “Kailway Transportation.”

May I make a reply to Mr. Acworth’s review (Economic
Journal, December, 1912) of my book, “Railway Transporta-
tion : A History of its Economics and of its Relation to the
State ?

The plan and scope of a book should always be, I think, in
view when its merits or defects are judged. It was thought best
to make my volume a very small one — of only about 300 pages
though it must cover a wide scope. This meant that it could
not be exhaustive, and that each statement must include the
maximum of fact and interpretation. Such a book must contain
some inaccuracies and some statements too concise to be entirely
clear when read by themselves. These limitations Mr. Acworth

300 THB ECONOMIC JOUBNAL [JUNE

has not, I think, taken into consideration. His criticisms are,
therefore, too severe, as I hope to show.

He says that my statement (p. 22) “that there was really no
effective competition between the parallel lines of railway**
(.British, 1872) is inaccurate. Let me quote the entire sentence
from which the above is taken : “This committee (of 1872) found
. . . that practically no competition in railway rates existed, that
there was really no effective competition between the parallel lines
of railw^ay, only between the railw'ay and ocean water transporta-
tion.** The clause which Mr. Acworth quotes should be judged
in its setting — not as a separate sentence. If there was no com-
petition between the railways in their rates, that of their facilities
could not mean much to the shippers. The Joint Committee
(of 1872) made these two statements : “United systems now exist,
constituting by their magnitude and by their exclusive possession
of whole districts, monopolies . . and “There can be little doubt
that effective competition does exist betw^een places between which
there is transit by sea.’* The Committee certainly left the impres-
sion that the railways were largely monopolistic, and that there
could be doubt about the existence of any “effective” competition
betw^een them.

Mr. Acworth is entirely correct in one criticism — that of the
coal tonmige (British) in 1852 and 1882 (p. 27). The stenographer
who made a typewritten copy of my manuscript left out, by
mistake, this phrase : “from the Midlands and the north of
England to London.” 1 examined the copy with the utmo:it care,
but this error wi\s not detected. The sentence should read, and
will be made to read : “The canals of England and Wales carried,
from the Midlands and the north of England to London, 33,000
tons of coal in 1852, only 7,900 in 1882, while for the same period
the coal tonnage of the railways increased from 317,000 to
6,546,000.”

Mr. Acworth thinks my statement (p. 29) that the “Briton,
in our year of comparison (1900) travelled on an average about
245 miles ” is incorrect. He estimates it at about 370. The
British facts are so meagrely published, that neither of us can
have a strong case of inaccuracy against the other ; we both can
only make estimates. I find that “Passenger Traffic and Bates’*
— an excellent work by W. E. Weyl — gives (pp. 88-9) the figure
at about 245.

Just what the exact average of actual passenger rates in Great
Britain has been since 1897, 1 do not know. I state (p. 34 — Mr.
Acworth says p. 24) that it has been perhaps as small as 1*75 to

1913]

BAIIiWAT TRAHSPOBTATION

801

2 cents. Mr. Acworth thinks it has been between 1 and 1*2 cents.
Here again absolute accuracy is impossible ; one can only make
estimates. If Mr. Acworth’s figures are correct, a large part of
all the travel has gone at a rate far below 1 cent, which I doubt.
The four sets of fares from which he makes his average are not,
I think, typical of the whole British service. If the British
average (of only three classes) has been between 1 and 12 cents,
it has been almost as small as that of the Prussian State rail-
ways (with four or five classes), which was 1*01 cents in 1900
and ‘89 in 1909 ; and the Prussian rates have been notable for
their smallness. From 5 to 9 per cent, of all the British travel has
gone first and second class, with standard rates at about 4 and
2*5 cents, with an average of actual rates as high a; 2 cents, and
higher. From 91 to 95 per cent, has gone at a standard rate
of 2 cents — at an actual rate considerably smaller. Let us suppose
that one-half of the travel has been at, say, ^2 cents, then the
other half has paid no fare if the average of actual rates of all
the travel has been only 1 cent ; and it has paid only ’4 cent
if the average of actual rates of all the travel has been only
1*2 cents. Now the fact seems clear that a very considerable
part of the travel has paid the standard rates, and that the
remainder has paid rates less than the standard by from about
20 to 50 per cent.

On p. 39 is this statement : “In the new classification and
maxima (1891-2), a number of commodities were not specifically
mentioned ; and upon these the railways at once advanced their
rates over the old ones, some of which had not been changed for
many years.” Mr. Acworth thinks that I entirely misunderstand
what happened, and that I give the impression that the railways
acted illegally in increasing some of their rates. What is there
in the above statement and in the whole paragraph from which
it is taken to suggest that I accuse the railways of illegal action?
Most certainly they had the legal right to advance their rates, by
any method, to the new maxima. Their method was in this case
to delay to reissue the old special commodity rates for 2-ton or 4-ton
lots. I am inaccurate in saying that “a number of commodities
were not specifically mentioned ” ; the railways now charged
certain commodities , which had been shipped at special commodity
rates, the maximum class rates.

Mr. Acworth cites two instances of inconsistencies : “The new
maxima (1891-2) established standards for all class rates, beyond
which any rate vrould be prirna facie unreasonable and illegal ”

, . . and “The maxima were an absolute limit, beyond which

302 . THE BOONOMIC JOUBNAL [jITNB

rates could not legally go (p. 57). Are these statements, made in
diCerent places, really inconsistent? I find that jurists assign
three meanings to the phrase prima facie ; one is that of practical
eg[ui valence to ipso facto. 1 make such a use of the phrase, and
I find such a use made by the Bailway and Canal Commission.
Again, are the following statements really inconsistent? — "‘It will
be seen from the above table of maxima (this part of the sentence
Mr. Acworth leaves out), that the actual rates are not much less.”
. . . and ‘'Much of the British freight moves, not at the standard
rates, but at special commodity rates, which are materially lower
than the class charges ” (pp. 42~3). The first statement is made,
as the context shows, in connection with maximum class (standard)
rates, and does not at all refer to commodity rates (reduced rates
granted upon the condition of larger shipments than the piece
shipments). The second statement refers, as the context shows,
exclusively to special (commodity) rates for larger lots, and to
these shipments the maximum class rates really do not apply.

Mr. Acworth thinks that I am not trustworthy in the chapters
which treat of the United States. He cites two inaccuracies. He
thinks rny statement (p. 187) : “There have been many thousands
of owners of the capital of each of these groups (geographical
groups railways), but the controlling personalities have for a few
years been those who hold large stock in the systems known as the
Vanderbilt, the Pennsylvania, the Morgan, the Hill, the Harri-
man, the Gould, and the More” is incorrect. He, I feel sure,
misunderstands the statement. It does not say, or even intimate,
that the Pennsylvania has been dominated by Wall Street, as
he reads my statement to say. The statement comes after one
which tells of the geographical grouping of the railways of the
United States, and must be interpreted in connection with it. I
merely say that the larger shareholders of the Pennsylvania deter-
mine for the most part its policy and management, and that it
has powerful influence in the “Trunk Line ” territory. The fact
that the Pennsylvania has 70,000 (75,000 is the accurate number)
shareholders, as Mr. Acworth notes, does not mean that a com-
paratively small number of them cannot and do not really control
its management. The vast majority of its shareholders have no
really active interest in its management — only in the fact that
the system shall be prosperous so as to pay dividends. Its directors
are, to be sure, freely elected by the shareholders, but it is also
true that the majority of these vote in a really perfunctory manner.
The U.S. Steel has as many as 105,000 stockholders, but a small
number control its management.

1913]

BAILWAY TBANSPOBTATION

303

Mr. Acworth cites the statement that “The railways of the
United States had in 1907 a ton-mileage approximately six times
that of the British ** (p. 226) as proof that I am not trustworthy.
He thinks that it was approximately eleven times. His criticism
in this instance only goes to show that the British facts are so
meagrely published, that even he — England’s great student of
railways — is somewhat at sea. I note that “Eailroad Traffic and
Bates,” by Johnson and Huebner — the most authoritative
American work — makes practically the same mistake as I do
(Vol. 1, p. 4).

Since Mr. Acworth has placed his emphasis upon the chapters
devoted to Great Britain and the United States, I have replied
to his criticisms of these, and to the more important ones only.

Has Mr. Acworth really proved liis case that the book has too
many inaccuracies? Has he really proved its value as a very
concise general statement of the economics and the poliiics of
railway transportation less because of some inaccuracies? I would,
however, prefer that my book be shown to be inaccurate in some*
of its statements — yes, in many — than that I should in making
reply show myself unfair in a single instance to Mr. Acworth.

Charles Lee Raper.

Let me first thank Professor Raper for the most«'<;ourteous
tone of his reply. I trust that my criticisms embodied no personal
discourtesy to him. If they did, I am heartily sorry. Whether
my criticisms were “too severe,” the readers of the Journal must
judge for themselves. Without going so far as to adopt Jeffrey’s
attitude, Judex damnatur cum nocens ahsolvitur, I still cannot
think that it is the duty of a reviewer to send back a book
unreviewed because he cannot speak favourably of it.

Having now read Professor Raper’ s reply, I do not feel able
to withdraw what I have said. But it would not be fair to occupy
space in the Journal by a rejoinder in each of the cases that he
deals with. And I must leave it to anyone who is sufficiently
interested to collate for himself Professor Paper’s original state-
ment, my criticism, and his reply. I will, however, deal with
just one instance, the last that he refers to. Professor Raper
writes

“Mr. Acworth cites the statement that ‘ The railways of the
United States had in 1907 a ton-mileage approximately six times
that of the British ’ (p. 225) as proof that T am not trustworthy.
He thinks that it was approximately eleven times.”

What I said was, not that I thought his estimate inaccurate,

304 THE ECONOMIC JOOBNAL [JUNE

but that “on his own figures the English ton-mileage is not
approximately one-sixth, but approximately one-eleventh of the
American.” His own statement was: “The railways of the
United States haul upon the whole a tonnage .practically two
times that of the British. . . . The typical haul per ton upon all
the railways [of the United States] was 254 miles in 1910. . . .
It is approximately 31 to 50 miles in Great Britain.” Taking
the tonnage as double, if the haul be eight times as long, the ton-
mileage is sixteen times as great ; if the haul be five times as long,
the ton-mileage is ten times as great. It cannot be approximately
six times.

I am sorry to say that I still think the book “has too many
inaccuracies,” and that “its value is less” because of them.

W. M. Acworth

Official Papers.

Report of an Enquiry into Agricultural Credit and Agricultural
Go-operation in Germany. By J. R. Cahill. [Cd. 6626.]
1913. l^p. xxxvi4'528. Price 5s,

Non| too soon has the Board of Agriculture and Fisheries
taken in hand the task, more than once pressed upon it, of
ascertaining by inquiry on the spot the condition of that co-
operative organisation of agriculture to which some foreign coun-
tries are known to owe a prosperous state of rural economy such as
we ourselves may well envy. The same matter has been dealt
with before by unofficial pens. We have also had various Blue
Books compiled by diplomatists who, in the words of the late Sir
Dominick Colnaghi, at that time Consul-General at Florence, were
fitted for the office neither by special knowledge nor by sufficient
leisure. The value of such reports is trifling. The masterful
report by Sir F. Nicholson on Co-operative Credit, indeed, stands
out luminously as a bright success among many failures. How-
ever, that rej^ort deals with credit only ; it was written for India,
and conditions have materially changed since it appeared in
print. Non-official accounts, although probably aff<5rding plea-
santer reading, can never attempt to give such minute informa-
tion — on laws, rules, methods, and the like — as an official
publication has space for. But these details are just what make
information valuable for practical purposes.

In addressing itself to its new task our Board of Agriculture
has rightly singled out Germany for its first inquiry. For it is

1913]

OFFICIAL FAPEBS

306

in Germany that, up to now, co-operation in the service of agri-
culture — and more specifically that cheville ouvrihe of all co-
operation, as the late Leon d’Andrimont has styled it, that is, co-
operative credit— has attained its highest level and produced the
most conspicuous results. And the Board has been fortunate in
securing for its research the services of so unquestionably com-
petent and remarkably painstaking a representative as Mr. J. B.
Cahill, who had already given proof of his capacity in several
similar publications. There are various points which an homme
du metier could have wished to see treated in a rather different
fashion ; and however great be the 2)ains that the inquirei: has
taken, and however precise may have been his study of things
on the spot, to a certain extent his tale is bound stili to remain a
relatio relatorum, in which the one-sided opinions of informants
necessarily colour his judgment. TTowever, such dubiiable points
are mere specks in the general j)roduction, which may safely be
recommended to our agricultural authorities, our would-be
organisers of agricultural co-eperation, and our agriculiiirisis as a
whole, for careful study as an undoubtedly valuable and trust-
worthy guide.

The arrangement of the matter is likewise convenient and
perspicuous. However, its very merit on practical grounds lessens
its value a little in this respect that it tends, while minfftely and
very accurately describing methods, to some extent to obscure
underlying principles, wdiich in this case are of prime import-
ance. The author describes methods of the “General Union,”
the “Imperial Union,” and other “Unions ” in turn, so as almost
to suggest that such methods may be interchangeable parts. And
the “multitude of counsellors” of the “Imperial Union” whom
he has consulted, seem to have inclined him rather in favour of
that body, which has, indeed, “great battalions” to show, but
which possesses no common principle and which recent events
have demonstrated to be dangerously dependent upon State help.
So it is in respect of that mere handful of rural societies with
limited liability whose principle the very leaders of the Union
concerned repudiate and whose methods presuppose conditions
(such as access to the income-tax registers) which are to be met
with only in Germany. Limited or unlimited liability, large or
small working districts, inquiry or non-inquiry into the object of
loans, and whatever else there may be, are all integral pieces of
one system or another, the underlying jirinciple of which con-
sistently determines which should be resorted to. Schulze
Delitzsch — ^to whose services to agriculture Mr. Cahill scarcely

306

THB BQONOMXC JOITENAL

does full justice — organised the people with money and with a
knowledge of business. Hence the generally “capitalist colour of
his system. Raiffeisen had the small man, down to the very
poorest, distinctively in his mind. Therefore he tabooed shares, so
far as legislation would permit, and resorted to unlimited liability
as a substitute for ready cash — ^not by any means for the sole
purpose of supplying financial “ cover,’’ but rather as a com-
I)elling inducement to rich and poor alike to practise the keenest
vigilance in respect of even the smallest transactions. The
ambition of Haas — an ambition amply fulfilled — was to create a
large ix)pular movement, with large agriculture prominently
represented in it, favoured and assisted by Governments, and
therefore ]X)litical and promoting class interests. So he was
driven to running with the hare while hunting with the hounds.
To what dangerous extent his societies piled an “intolerable deal ”
of liability upon “poor ha’porth” of security, Herr Heuzeroth
has shown in a paper read before the Budapest International
Co-operative Congress. And the truly dramatic breakdowns of
co-operative banks in Herr Haas’ own country of Hesse since Mr.
Cahill wrote shows how full of danger is the system carried out on
such lines. Those lines include the facile credit in current
account without inquiry into its object which appears to commend
itself to ‘Mr. Cahill, but which the best authorities view with grave
misgivings as likely to lead to loss. It was those abuses which
rightly led the Prussian State-endowed Bank to tighten the reins
from 1898 onward. But in doing so it went, in its exactions
and its ambitions, beyond what Mr. Cahill appears to have been
told. The calamitous collapse of the Haas Central Bank has
altered the position of things since Mr. Cahill wrote, and thrown
fresh power into the hands of the State-endowed Bank, from
tutelage under which the “General Union” has deliberately freed
itself, from which the Union of “Industrial Banks,” as Mr. Cahill
calls it, has expressed its desire to break loose, and from which the
“Imperial Union” has laboured since 1898 to make itself
independent.

As a trained linguist Mr. Cahill deals with German nomen-
clature far more successfully than other authors, whose gauche
translations are often bewildering. But it is a little to be doubted
whether under the name of “taxed value” English readers will
detect simple “valuation,” and under that of “caution-credit’^
fidelity guarantee.

But these are trifles. Looking at the Report as a whole it
must be pronounced a distinct success, of great value, instructive

1913]

OFPlCIAti PAFEBS

307

and illuminatinff, trustworthy and remarkably clear in its
langitage.

Henby W. Wolff

Departmental Committee on the Night Employment of Male
Young Persons in Factories and Workshops, liepori.
[Cd. 6533.] 1912. Price 3d. Evidence. [Cd. 6711.J

1913. Price 2s. id.

The night employment of children was one of the subjects of
the earliest Factory Act. In 1850 the i>rohibition of the eny)loy-
ment of all young persons aged under eighteen between G p.m.
and 6 a.m. was made absolute throughout the textile, trades. But,
as the Factory Acts were gradually extended during the succeed-
ing quarter of a century to other industries, exceptions were
allowed to the normal extf'Xisiou of the prohibition. These now
survive partly in the form oC statutory exemptions, and partly in
the form of special orders ot the Home Secretary, which together
have the effect of legalising the employment of boys aged over
fourteen, or, in some cases, over sixteen, in sixteen specified
kinds of works or processes. In 1911 an order was issued to
permit the employment at night of boys over sixteen in the
manufacture of artificial silk, which a German firm had decided
to introduce into England, partly on account of the new Patent
Act regulations. The managing director of the British company
formed to carry out the project informed the Departmental Com-
mittee that “the w^ork is degrading in its simplicity to full-growm
men,” and that therefore “night employment is essential ” for
boys. Protests were, however, made in Parliament against the
extension of the principle of night work, and, in consequence,
Mr. Churchill appointed a Committee to inquire into the whole
question.

The evidence given before the Committee contains a mass of
interesting information wdth regard to the detailed organisation
of the trades in question. Glass wwks appear to be the largest
employers of boys in night work, and after them iron mills. The
unions in the glass-bottle trade on the whole are op]X)sed to the
raising of the minimum age for night emj)loyment. The men
and boys generally work in groups of four or five, known as
“holes” or “chairs,” and if labourers were substituted for boys
in the unskilled branches of the work, it is feared that the share
of the group’s piece-work earnings, which goes to the skilled
“blowers ” and "gatherers,” would be reduced. But the secretary

308

THB BOOlilOMIO JOtJBlSAL

[JUNB

of a union representing the London men favoured the abolition of
, night work for boys on the ground that it was deleterious to their
health. In London apparently employers have taken advantage
of the rule permitting the employment of boys at night, to engage
them not only for the actual work of making bottles, but also to
stoke furnaces. The evidence of another union secretary, who
objected to any interference with the night work of boys, showed
in a striking way th4 “ blind-alley character of the glass-bottle
trade for boys. In five districts 1545 boys under eighteen were
engaged in making bottles, as compared with 2053 nien over
eighteen. Miss Sanger gave evidence on behalf of the Inter-
national Association for Labour Legislation, which has been
endeavouring for some time to secure an international treaty to
prohibit the night work of boys, similar to that which already
prohibits the night work of women. It is to be hoped that the
conference of representatives of Governments, which is to be held
to discuss the problem this year, will succeed in securing effective
international co-operation.

The recommendations of the Committee may be summarised
as follows : (1) Withdrawal of eight out of the sixteen exemptions
from the prohibition of night work ; (2) the raising of the mini-
mum age for night work from fourteen to sixteen in glass works,
iron mills, and paper mills ; (3) permission to be granted to employ
boys up to 9 or 12 p.m. only in newspaper printing (on two days
in the v/eek), china clay works, and electrical stations; (4)
periodical official medical inspection of all the boys aged sixteen
to eighteen who are still allowed to be employed at night.

F. Keeling

Report of the Committee of Inquiry into the Conditions of
Employment in the Linen and Other Mahing-up Trades of
the North of Ireland, [Cd. 6509.] 1913. Pp. xxviii + 191.

The Eeport on the Conditions of Employment in the Linen
and other Making-up Trades of the North of Ireland is an ex-
tremely interesting contribution to the literature of women's
work and wages. Many of the processes in these trades, e,g,,
hand-embroidery, thread-drawing, machine-stitching, &re carried
on in the homes of women out- workers in Belfast and other towns
and villages of the North of Ireland. Very little of the work is
really unskilled, and some of it requires a very high degree of
skill. But both skilled and unskilled branches are carried on
under conditions with which experience of home-work in other
trades has made us only too familiar. Long hours of work for a

191B] ofFidiiyL paPMM

miserable wage, the employment of children after school hours,
and in the country districts the abuses of thantruck system, are
common features of the industry. i

It is true that gross underpayment only exists in certain
branches of the trade, and even in these branches many employers
appear to pay fair rates. There seems, however, to be a total
absence of uniformity in the practice of different firms. One
worker alleged, for example, that when 'working for one firm she
could earn at the rate of 2d, an hour, but when employed by
another firm on exactly the same sort of work, she could only
make a id, a hour.

The evidence given by employers suggests that they are, on
the whole, desirous that their workers should be able to earn a
fair wage, (the standard of “fair” appears to ho 10.s\ or 12^?. a
week), but sometiiues they seem io be ignorant of the amount
which a worker of average eflficieiicy can earn ixt the piece ^ates
paid ; in other cases the competition of the less scrupulous
employers has forced wages down to what is admitted to bo a
“sweating rate.”

The principal recommendation of the Committee is the appli-
cation of the Trade Boards Act to certain processes of the making-
up trades. To this proposal the employers as a whole have
offered no opposition, provided the decisions of the Boatd apply
equally to their competitors in other parts of the United Kingdom.

G. JEBB

Report to the Board of Trade on the Industrial Disputes Investi-
gation Act of Canada, 1907. By Sir George Ask with,
Chief Industrial Commissioner. [Cd. 6603.] 1913. Price
Sid,

This Eeport is the outcome of a visit paid to Canada by Sir
George Askwith. It is chiefly concerned with a dt^scription and
analysis of the Canadian Act, together with some account of the
feeling of public opinion towards it in Canada. “The simple
purpose of the Act,” the Report states, “is to ensure the recogni-
tion of the interests of the public, as a third party, in trade
disputes, and the insistence that that third party, through the
GovernnyMt, shall have a voice in regard to a dispute affecting
their int^ests.” The Act, how'cver, is confined

1. To industries whose uninterrupted continuance is of high
importance to the well-being of the nation (mining, railways,
shipping, and otuer public utilities.

No. 90. — VOL. XXIII.

310 THE BOONOMIO JOtJRNAL fjUNft

2. To a brief suspension of the right to stop, as distinct from
a complete prohibition of stoppage.

Thus the Act differs essentially from compulsory arbitration.

To quote the Keport again : “It does not destroy the right of
employers or workpeople to terminate contracts. It legalises the
community’s right to intervene in a trade dispute by enacting that
a stoppage, either by strike or lock-out, shall not take place until
the community, through a Government department, has investi-
gated the difference with the object of ascertaining if a recom-
mendation cannot be made to the parties which both can accept
as a settlement of the difference. It presupposes that industrial
differences are adjustable, and that the best method of securing
adjustment is by discussion and negotiation.”

In summing up at the end Sir George Askwith gives it as his
opinion “that the forwarding of the spirit and intent oi cx)ncilia-
tion is the more valuable portion of the Canadian Act, and that
an Act on these lines, even if the restrictive features which aim
at delaying stoppage until after inquiry were omitted, would be
suitable and practicable in this country.”

Return of Correspondence with the Bank of England and Messrs.
Samuel Montagu and Compamj, relating to the Purchases
of Silver in 1912, [H. of C. 100.] 1912. Price Is. 3d.

Copy of Papers^ including Communications which have passed
betivecn the Secretary of Stale for India aiid the Government
of India, regarding the quesiion of the Establishment of a
Mint for the Coinage of Gold in India. [H. of C. 495.]
1913. Price GJc/.

Memorandum on India Office Balances {prepared under the
instructions of the Secretary of State for India). [Cd. 6619.]
1913. Price 2Jr/.

Report on the Operations of the Paper Currency Department
during the year 1911-12. 1913.

The first three of the above are documents published in con-
nection with the recent Parliamentary attack on the India Office.
The fourth, by Mr. E. M. Gauntlett, contains some valuable
data, in continuation of Mr. Gillan’s report of last year (see
Economic Journal, vol. xxii., p. 145), respecting the present
position of the sovereign as a medium of exchange in India. The
return which relates to the silver purchases has not much
economic interest, apart from the light which it throws on the

1913]

OFFtCUL FAFBBS

811

organisation 6f the silver market. The history of proposals for
a gold coinage in India contains several documents of historic
interest, especially an important despatch from the Government
of India to the Secretary of State (August 24th, 1899), acknow-
ledging the receipt of the report of the Fowler Committee, which
has not, so far as we know, been published previously. The
Memorandum on the management of the India Office balances
makes public a good many details for the first time. The student
of Indian financial arrangements will find all these documents
useful.

Memorandum and Statistical Tables, showing the Productiort and
Consumption of Iron Ore and Pig Iron, and the Production
of Steel, in the United Kingdom and the Prmcipal Foreign
Countries iu Recent Years, and the Imports and Exports
of Certain Classes of Iron and Steel Manufactures,
[H. of C. 402.] 1913. Price Id,

To be reviewed.

Report of the Departmental Committee to Enquire and Report
as to Buildings for Small Holdings in England and Wales,
together with abstracts of the evidence, appendices, and a
series of plans and specifications, [Cd. 6708.] 1913. Price
ll6‘. 3d.

A DETAILED report on the best types of houses and farm equip-
ment for small holders, and of cottages for farm labourers. There
is a good deal of evidence as to cost from the witnesses, but the
report does not generalise in any way about this. A sub-committee
visited Sweden and report on what they saw. The plans and
specifications at the end are numerous and detailed.

Report of an Enquiry by the Board of Trade into the Earnings
and Hours of Labour of Workpeople of the United Kingdom,
VIII. — Paper, Printing, etc,. Trades; Pottery, Brick, Glass,
and Chemical Trades ; Food, Drink and Tobacco Trades ; and
Miscellaneous Trades in 1906. [Cd. 6556.] 1913. Price

2s, 8d,

To be reviewed.

Statistical Abstract for Foreign Countries in each year from 1900
to 1910-11. [Cd. 6698.] 1913, Price Qs.

Return Showing the Average Prices of Wheat per Imperial
Quarter in the United Kingdom, France, Germany, and the

Y 2

312 TW& ECOKOMXO JOUENAIi [TOKS

United States, in each year from 1840 to 1912, with par-
(iculars as to rate of Import Duty leviable in . each country
during each year. [H. of C. 46.] 1913. Price Jd.

Return Showing for each Financial Year from 1875 to 1913 the
total amount of Dead Weight Debt outstanding on the Ist
April, and a similar statement in respect of other Capital
Liabilities, with other particulars relating to the National
Debt. [H. of C. 82.] 1913. Price Id.

Comparative Statement of Pauperism and Cost of the Rdief of
the Poor in certain years from 1848-9 to 1911-12. [Cd.
6G7e6.] .1913. Price

The following figures are extracted from the above return : —

Year.

Ratio of

pauperism per 1,000

1 of population,

Total annual
Expenditure.

[

Average cost per head.

Average
poor rate
per £ of
rateable
value.

Indoor.

Outdoor.

Indoor,
db s > d.

Outdoor.

£ s. d.

5. d.

1849

7-7

54*4

5,792,963

7 17 8

a 11 2

1 8*6

1860

5-8

3G-8

5,454,964

7,644,307

8 0 9

4 0 2

not known

1870

38-2

9 11 8

4 5 8

1 6-6

1880

7-1

23-2

8,015,010

9 14 10

4 12 4

1 2*4

1890

6*6

18-8

8,434,345

10 2 11

4 11 4

1 1-6

1900

G'G

15-8

1 1,567,649

12 11 1

6 6 1

1 3*8

1910

8 0

15-2

14,849,584

12 18 1

6 3 10

1 4-6

1912

11*3

14,463,902

13 16 9

6 16 3

1 3*9

Current Topics

The returns with regard to tlie working of the Unemployment
Insurance scheme in the compulsorily insured trades, as published
in the Board of Trade Labour Gazette, provide a new measure of
unemployment. Since February figures have been given with
regard to the number of men claiming benefit for each week after
15th January, the date from which benefits became payable. The
percentage of the number of claims to the number of Unemploy-
ment Books issued in each group of occupations is the most satis-
factory measure of unemployment which has hitherto been ob-
tained. The main difficulty connected with it is the fact that
the men who have taken out Unemployment Books are constantly
leaving the compulsorily insured trades. Their books may or may

1913] OtTBBBNT tUOHOS 318

not (in accordance with the law) have been returned to a Labour
Exchange. On the other hand, the return of the actual pay-
ments made each week by the local offices of the Unemployment
Fund is not a satisfactory measure of unemployment, because it
does not inclutte the claims paid, through Trade Unions, in
accordance with Section 105 of the Act. In February 22,641
“indirect claims ** were made through Trade Unions, as compared
with 65,005 “direct claims dealt with by the Labour Exchanges
and local agencies. The corresponding figures for March are
17,522 and 48,055. The percentage of claims made to books
issued is markedly higher in London and the south-eastern
counties, and in Ireland, than in the remaining six areas into
which the country is divided. This is true not only of the
insured trades as a whole in each of the four months January,
February, March, and April. It applies also throughout the period
to each of the six groups of occupations, inio \^hich the insured
trades are divided, with a very few exceptions. The following
table shows the percentages for all insured trades together : —

31st Jan.

28th Fob.

28th Mar.

26th April.

London

9-4

8-6

4*5

Ireland

8-2

8-4

7-6

Whole of United Kingdom

6*0

4‘4

3-5

2-8

It is noticeable that the lTnem])loyineiit Insurance^ percent-
ages are considerably higher than the Trade Union unemploy-
ment percentages in all the groups of trades in which a comparison
can be made.

A REMARKABLE sidelight upon the proportions of skilled and
unskilled labour in industry is given by the classification of the
2,297,326 Unemployment Books issued up to 1st February, 1913.
Even after navvies and machinists of all kinds have been placed
in the category of specific “trades/* there remain no few^er than
722,163 “labourers, etc.,’* in the insured trades — about a
third of all the insured persons. Only about 10,000 women are
included in the scheme. The decisions of the Umpire, which have
very largely placed the manufacture of accessories and parts for
machinery and vehicles outside the category of insured trades,
have incidentally had the effect of excluding from the scheme
some thousands of women engaged in the metal and cycle trades.
The Umpire has had a difficult task, and his decisions have already
attained to the dimensions of volumes. It involves no criticism
on his work to express the hope that the complicated frontier
between insured and uninsured occupations, which he has felt
obliged to establish, will be rounded off at an early date by orders

ai4

TOB Hooisomo JOXJUNAL

of the Board of Trade bringing within the scope of the scheme
occupations, now excluded, which are, so far as the workman is
concerned, identical with those already included within it.

The scheme has undoubtedly encouraged some Trade Unions
to pay unemployment benefits, where they did not do so before^
It was anticipated that Unions, which formerly paid unemploy-
ment benefit, would use the grant of seven shillings from the
Government’s Unemployment Fund to reduce their own liabilities
in meeting claims — possibly lowering their rates of contribution.
But some important Unions, such as the Amalgamated Society of
Engineers and the Scientific Instrument Makers, have added
the seven shillings provided under the scheme to the benefits
formerly paid, so that many of their members can now draw sums
approximating to^ a pound a week during unemployment. The
arrangements under Section 105 of the Act, for payments of benefit
to Trade Unionists through their societies, are almost necessarily
somewhat complicated. Many of the branch secretaries of the
Unions have experienced difficulty in fulfilling the Board of Trade
requirements with regard to the filling up of forms, etc. Accounts
from different, parts of the country seem to show that the Courts
of Eeferees are inclined to be generous to the workpeople against
whose claims to benefit the Insurance Officers have raised objec-
tions. One of the acutest hardships caused by the drafting of
the scheme arises out of the definition of “continuous unemploy-
ment “ given in section 107 (1). This undoubtedly is not suffi-
ciently elastic to enable casual ship-repairers and others to obtain
the benefits, to which they would seem to be equitably entitled.

Our South African correspondent writes as follows with
reference to Mr. Morgan Eees’s article in the March number of
the Economic Journal : — Mr. Morgan Eees has given an in-
teresting comparison of wages and cost of living in South Africa,
referring especially to Johannesburg : but some of the figures need
modification on account of the recent changes. Cost of living, at
least in Johannesburg, is falling, because the increase in popula-
tion and the growth of more settled conditiq^ outweigh the influ-
ence of the w^orld-wide rise in prices. Thus, as to food : the diet
mentioned on p. 135 should not cost more than 30^. per week ;
there are good restaurant meals to be had at a shilling — breakfast)
lunch, or dinner ; and full board for a workman at one of the
mines, where things are done particularly well, costs £6 a month.

1913]

CBBEBirr Clones

815

Meat and vegetables are cheaper than in England, and probably
the whole cost of food is very little greater. Rent is still excessive,
but not quite so extravagant as Mr. Kees states. A good foxlr-
roomed brick cottage, with kitchen and bathroom, suitable for
an artisan’s family, can now be built for £500 (according to in-
formation kindly supplied by the town valuer), and the land
needed ought not to cost more than £60 at the most. On the mine
referred to above, the rent of a workman’s cottage is from £3 to
£5 a month, while single rooms are let to miners for lO^v. a month.
In the suburbs the rent of the cottage should be £5 or £6 a month.
Johannesburg is a professional and businessman’s town’ rather
than a workman’s, and the cost of living to the middle classes,
though high, is not quite what it is usually put at. For example,
board at a good club costs about £10 a month ; one can get lunch
in town for l5. 6d. to 2s, 6d. ; kaffir servants (who do as much
work as English ones) mostly get £3 a month ; and a man who
settles in the town and builds his own house, would find a little
suburban villa in a quarter acre of garden cost for interest, depre-
ciation, rates, and water about £80 to £100 a year. An interesting
aspect of these figures is the way in which they indicate the
approximation that is taking place between England and one of
the colonies. The approximation is noticeable both in^ wages and
prices.

“W.J.A.” writes: Among the discussions in the Economic
History sub-section of the International Congress of Plistorical
Studies, held in London in April, one of the most instructive was
that introduced by Professor Schafer, of Berlin. It was apropos
of the publication, now on foot, of the records of dues paid at
Ivronborg by ships passing the Sound. Professor Schafer j)ointed
out that the Sound w^as for centuries the most frequented maritime
thoroughfare of the world ; and as the records are extant for the
years 1497, 1503, 1528, 1536-1547, and from 1557 almost complete
to the abolition of Sound dues in 1857, they constitute an exceed-
ingly valuable, though hitherto hardly used, source of information
for the history of commerce and shipping. A volume i)reBenting
in tabular form the information as to number, ownership, and
origin of the shipping, for the period ] 497-1660, was published
in Copenhagen in 1906, under the editorship of Mrs. N. E. Bang
(Tabeller ooer Skibsfart og Varetransportj etc.) ; and a second is
about to appear, dealing with the nature and value of the cargoes
for the same period. For these the cost has been borne by a
certain Carlsberg Fund at Copenhagen. From 1660, however,
the information concerns other countries far more than Denmark,

316 THE BdbNOMIC JOHBNAIi . fjUNB

especially as Danish ships paid nothing ; and the Danish fund is
no longer available. The energy of Professor Schafer, who has
done so much for Hanseatic history, has already got together, from
various Governments, municipalities, societies, and individuals on
the Continent, a sum sufficient to pay for the tabulation and
printing of the material down to the year 1800. But before the
editorial staff is disbanded, a complete job ought to be made of
the whole business down to 1857. Here is an opportunity, as
Profesor Schafer justly represented, for Elngland to take its fair
share in an international enterprise which, after all, concerns its
own past history very vitally. A certain modest amount of help
has already been given by and through the British Academy.
But much more ought to be done. Perhaps it is hopeless to expect
even a small grant from our Government, which, curiously enough,
usually takes up a more narrowly official and cautious attitude in
such matters than the more bureaucratic Governments of the
Continent. But there ought to be British shipowners to whom
the project commends itself ; and Professor Dietrich Schafer,
Friedrichstr. 7, Steglitz, would gladly give further information.

It is not possible at present to do more than indicate the
provisionaLprograrnme of the section for Economics and Statistics
at the meeting of the British Association to be held at Birmingham
from Soj)tember 10 to 17. The presidential address will be de-
livered by Ilev. P. IT. Wicksteed, who is president of the section.
With reference to the sectional proceedings, the experience of
recent years has shown the advantage of endeavouring to concen-
trate discussion on certain topics. By this method the objection to
which such gatherings are subject (namely, the disconnected
nature of the papers and discussions) is obviated to some extent,
and a day can be assigned to a specific topic instead of the
morning being divided amongst some four papers on distinct
subjects. By the former method, too, a longer time can be
given to speakers, who, in some cases, are invited by the com-
mittee to take part in the debate. One debate for which it is
proposed to arrange a day will probably be on some aspects of the
cost of living, to which Professor Bowley and Mrs. Wood are
likely to contribute papers. Considerable local interest has been
shown lately in the question of canal navigation, and a day has
been allocated to this subject. There will be papers by Lord
Shuttleworth,. Sir John P. Griffith, Mr. E. B. Dunwoody, and
others; and Sir John Brunner, Mr. Neville Chamberlain, Mr,
Frank Impey, Mr. Frederick Morton, and Mr. J. F. Saper ai’^

1913} tropics 317

expected to te able, to join in the discussion. It is also proposed
to deal with the position and exposition of economic theory from
the point of view of related studies and activities. In recent years
theoretical, and in particular mathematical, economics have
not been prominent at these meetings ; but at Birmingham the
latter will be represented by a paper from Mr. A. J. Kenny,
of Birmingham University, entitled, “How far are Mathematical
Methods really of use in Economic Science?” It is hoped that
some theoretical papers may be arranged for later. Professor
Oldham will read a paper on “ The Study of Business Organisa-
tion,” and Professor Kirkaldy on “The Economic Effects of the
Opening of the Panama Canal.” The drawing up of a pro-
gramme for this meeting is always something of a proolem. The
object of the Association is to encourage contributions (either in
the form of suitable papers or by discussion) from those who are
not professional economists, while, at the same* time, an endea-
vour should be made to attract the specialist by providing dis-
cussions of interest to him ; and finally, there are the claims of
the general body of members of the Association who desire to
obtain some competent guidance on those economic questions
which occupy their attention at the moment. P^ven when an
equilibrium has been discovered between these aims, there is still
the difficulty of finding an ideal distribution of the a^tiilable time
between the papers and speakers that turn out to be available
at the meeting. All that can be said is that these various com-
peting claims have, at least, been kept carefully in view by the
committee of the section.

The Societe d'Economie Politique of Paris announce that the
subject has been changed in the competition (announced in the
Economic Jouenal, December, 1912, p. 644) for the prize
founded by M. P^mile Marcet, and an extension of time granted.
The subject of the competition is now “ The Evolution of Protec-
tionist Ideas since 1815.” The prize will consist of a gold medalj
worth about 300 francs, and a money payment of 1,000 francs.
The manuscripts (in French) should be sent before December
31st, 1914, to M. Daniel Bellet, 18 Eue des Canus, Maison-
Laffitte (Seine-et-Oise), from whom further particulars can be
obtained.

We regret to announce the death last month in his seventy-
second year of M. Alfred de Foville, perpetual secretary of the
Acad4vw de$ Sciences morales et politiques. An obituary notice.

318

THB BOOHOWO JOURNAL

[JUNE, 1918

of M. de Fovilte will appear in the September number of the
Journal.^ His death, following so soon after the recent deaths
of MM. Levasseur, Molinari, and Passy, to the youngest of whom,
however, he was twelve years junior and to the oldest twenty-three
years junior, marks with further emphasis the passing away, after
an unchallenged reign of nearly fifty years, of the old-fashioned
school of French economists.

Appointments. — Mr. J. Eadie Todd, M.A. (Edin.) and B.A.
(Oxon.), formerly lecturer in Economic History at Edinburgh
University and lately lecturer at McGill University, has been
appointed Professor of History and Economics in the University
of Dalliousic, Halifax, Nova Scotia.

Mr. A. N. Sliimmin, M.A., has been appointed an Assistant
Lecturer in Economics in the University of Manchester.

RECENT PERIODICALS AND NEW BOOKS.

Economic Review.

April, 1913. • Trade Unions^ Trade Lists, and the Law. Prof.
W. M. Geld ART. The Housing Question. Dr. T. C. Fry. Co-
partnership and Labour. L. V. Lester-Garland. India and
the Sugar Convention. D. A. Barker. Outdoor ReJirf. C. F.
Bogers. Dr. Carlyle on Wages. Prof. Edwin Cannan. A long
and severe review. Prof. Ashley discusses Prof. 1. ]^1sher*s
various recent articles, and Mr. Sidney Ball reviews at some
length Prof. Pigou's Wealth and Welfare.

Statistical Journal.

February, 1913, The Population of E^igland in the Eighteenth
Century. E. C. K. Gonner. A learned study of tli’fe authorities.
Note on Urban and Rural Variations according to the English
Census of 1911, Thomas A. Welton. A study of the recent
“tendency towards loss of population by migration in the case
of several of our largest cities.”

March, 1913, The Panama Canal and Competition for Trade in
Latin America, the Orient, and Australasia. Prof. Lincoln
Hutchinson. Prices of Commodities in 1912, A. Rauerbeck.
The Rate of Interest on Investments in 1912. 11. A. JiEHFELDT.

Prof. Lehfeldt brings the calculations of a former article up to
date.

April, 1913. An Account of an hiquiry into the Extent of Economic
Moral Failure among certain types of Regular Workers. D. C.
Jones. The results of circularising certain public and private
employers in regard to the nunjher of employc'.os dismissed, and
the relative importance of different causes of dismissal.

Bankers' Magazine.

March, 1913. Bank Work from a Junior Clerk's Standpoint: Col-
lection and Payment of Cash Articles. A very useful account
of the machinery and technique of the Clearing House.

April, 1913. Balance-sheets of Banks in the United Kingdom
during 1912.

May, 1913. Proportion of Cash to Deposits of Banks in the United
Kingdom during 1912. Canadian Banking in 1912. H. M. P.
Eckardt. a valuable summary of the banking position and of
current banking history in Canada.

820

THE BOOKfOMIC JOUitllAL

[jimB

/ . : Women's Industrial Jt^ews.

April, 1913. The Tea-shop Girl (15 pp.), Barbara Drake. An
interesting report of an Inquiry undertaken by the Investigation
Comniittee of the Women’s Industrial Council.

Bulletin of the British Library of Political Science.

January, 1913. This is the first number of a new quarterly Bulletin
dealing with the library attached to the London School of
Economics. Each number contains lists of the principal recent
accessions, of some of the principal desiderata, and of duplicates
available for exchange. In addition, there is to be a series of
Selected Bibliographies. I. The Bibliography of the Nationalisa^
lion of the Coal Supply.

April, 1918. Selected Bibliographies. II. Bibliography of the Civil
Service. Miss W. C. Hill.

Quarterly Journal of Economics (Harvard).

February, 1913. A Compensated Dollar. Irving Fisher. Prof.
Fisher pursues his now familiar theme. The Organisation of the
Boot and Shoe Industry in Massachusetts before 1875. Blanche
E. Hazard. The Locomotive Engineers' Arbitration: its Ante-
cedents and Us Outcome. L. J. Cunningham. The Decision on
the Union Pacific Merger. Stuart Daggett. F rank f orUon- the -
Main: a Study in Prussian Communal Finance. II. Anna
Youngman. Eaihvay Rates and Joint Cost Once More. F. W.
Taussig. A criticism of the views advanced on this subject by
Prof. Pigou in Wealth and Welfare.

American Economic Review (Boston).

December, 1912. The Definition of Price. Frank A. Fetter. A
very large collection of the definitions proposed by various
authors in the last 100 years. Prof. Fetter favours a defini-
tion which is without reference to money. Transportation and
Competitio7i in South American Markets. H. Parker Willis.
The Impatience Theory of Interest. Henry K. Seager. A
criticism of Prof. Irving Fisher. Agriculhiral Credit in the
United States. E. W. Kemmkrer. A discussion of how far the
National Banks can, under the existing law, serve the needs of
the farmer, and how far the adoption of a Co-operative Credit
System might prove useful.

March, 1913. Objections to a Monetary Standard Based on Index
Numbers. David Kinley. A criticism of Prof. Irving Fisher’s
proposals. Aj^art from the point that a unit of money would be
maintained by Prof. Fisher’s plan at an equivalence with a
fixed quantity of goods, but not with a fixed quantity of utility,
Prof. Kinley ’s criticisms arc based on a theory of money which
would not commend itself to those who are in c.,ny sort of general
agreement with the monetary logic underlying Prof. Fisher’s
proposals. Prof. Kinley lays stress on the importance of know-
ing the precise cause of the rise of prices, whether due to varia-
tions in the supply of money or of goods or to a changed rapidity
in the sale of goods or in the volume of credit, before attempting
to remedy its consequences. The Commerce Court Question*

1913] mourn -pebiodicaiiS Am mvr boobs 8^1

Samuel 0, Punn. Methods of Business Forecasting based on
Fundamental Statistics, Jambs H.- Bbookmike. Deals with
thd methods ox Jevons, Benner [an Ohio farmer, author (in 1875)
of Book of Prophecies] , Babson, and Irving Fisher. The Tariff
Board and Wool Legislation, W. S. Culbertson.

March, 1913, Supplement. Papers and Proceedings at the 25th
Annual Meeting of the American Economic Association, Popu-
lation or Prosperity, Frank A. Fetter. Presidential address
on the current importance of Malthusian ideas to the United
States. Standardising the Dollar, Irving Fisher. Followed
by an interesting and critical discussion. Banking Reform in
the United States. E. W. Kemmeker. Both the paper and the
discussion which followed it contain interesting evidence of
the present state of public opinion in the United States* towards
the proposals of the Monetary Commission. Theories of Distri-
bution. Bound Table Discussion opened by Prof. Patten. Farm
Management. Bound Table Discussion. Frontiers of Regulation
and What Lies Peyond. John M. Clark. A criticism of the
policy of peniiilting monopoly, subject to price regulation by
Government. The Ecoyioniics of Qovernpicntal Price Regula-
tion. Chester W. Wright.

Political Science Quarterly (New York).

March, 1913. The Tariff Board’s Wool Report, L. D. H. Weld.
Recent Tax Reforms Abroad. III. E. B. A. Seligman. Mainly
concerned with Australasia.

Annals of American Academy (Philadelphia).

January, 1913. A series of articles on Canadian National Problems,
including: — Reciprocity. Clifford Sifton. Canada and the
Preference, S. M. Wickett. Mineral Resources of Canada.

G. A. Young. Canadian Banking. H. M. P. Eckakdt.

March, 1913. A series of articles on Prison Labour.

Journal of Political Economy (Chicago).

February, 1913. A series of articles on Schools of Commerce in
American Universities, including Chicago, the Wharton School,
Dartmouth College, and Wisconsin. Canadian Banking Legisla-
tion, S. B. Weaver. An account of the provisions of a new
Bill introduced at the end of 1912.

March, 1913. Further articles on Schools of Commerce, including
the North-western University School and the Boston High
School, and on the value of “vocational training ” in Cormnerco.
The Industrial Training and Placing of Juveniles in England,

H. Winifred Jevons. A summary for American readers of what
has been done in England.

Bulletin of the U.S. Bureau of Labour (Washington).

No. 101. Care of Tuberculous Wage-earners in Germany.

No. 102. British National Insurance Act, 1911.

No. 103. Sickness and Accident Insurance Law of Switzerland.

No. 104. Lead Poisoning in Potteries, &c.

No. 105, Parts I. and II. Betail Prices, 1890 to 1911.

No, 106, Parts I. and II. Betail Prices, 1890 to June, 1912.

322

THE EOOKOMIO a:OTJBNAXi

[junk

Revue d* Economie Politique (Paris).

MxtueH-ApRiL, 1913. Quelques remarquea sur la rente du Bol urhain.
Achille Loeia. Le Chemin de fer tranaafricain. Lea conclu-
sions d*iine mission d* etudes. Ji. Leoouez. La loi soudanaise
sur Vappreniissage. E. Maunieb.

Journal des Economists (Paris).

February, 1913. La Banque d*Angleterre, F. Huth Jackson.
Eeprinted from Lectures on British Commerce.

M.aroij, 1913. Tyhnpcrialisme economique. Yves Guyot. Le
Prohlemc du credit. W. W. Carlile.

April, ]9J3. J/Ecolc aulrichienne d* economic politique. Feilbogen.
Tliis article (one of a long series) deals with Schumpeter. La
Situation economique et financiere de V Italic. Auguste

Pawlowski. jy Octroi de Paris. Lc passe. Le present.
L'avenir. (30 pp.) P. de Biermont.

Picvuc^ Eepnomique Internationale (Brussels).

February, 1913. La Reforme fiscale en Belgique. G. Bigwood. A
discussion of the Belgian budgetary arrangements by a professor
in the University of Brussels. 1/ Italic economique pendant

Vannee de la guerre. G. Nicotra. La Crise charhonniere en
liussie. M. Lanwiok.

March, 1913. La Revision des Tarifs en Amerique. Ch. A. Conant.
La Ilausse du Taux de Vint (Wet ei la Hausse des Prix. Ch.
Eist. ,, In distinction from A Stockbroker, whose article in the
Economic Journal he cites, Professor Eist emphasises the world-
wide universality and simultaneity of the recent rise in the rate
of interest. Ho ascribes it to the high level of industrial
profits, which, in its turn, is the direct result of high prices.
La Convvniion du SainUiRHhard. A. Gobat. L’ Industrie

Agricolc en France. M. Lair. La PtUiodicitc des Disettes en
Russie. B. Ciilepner. The periodicity of lean years in Eussia
may be interesting to students of similar phenomena in India.

April, 1913. Le port de (land. Cn. Chkistophe and M. De Beer.
Lcs fact curs (conomiques de V exportation des Capitaux Beiges.
Max L. Gerard. Contains some statistics of the rate of interest
payable on new emissions in Belgium, compared to those lately
worked out for England by Prof. Lehfeldt in the Statistical
Journal. Les Maximes fondamcntalcs du Regime des chemins
de fer dc VEtai. Chevalier de Wittik. A general discussion of
priucij)lcs. La Plausse des Prix. J. Pazousek. Emphasises,
with the hoi]) of some statistics, the part played by the great
growth in the use of cheques and notes in all European countries.

Archiv filr Sozialwissenschaft und Sozialpolitik (Tubingen).

January, 1913. Neuorieniicrung in der Sozialpolitik ? Prof. Alfred
Weber. Zur liistorischcn Analyse des Patriotismus. I. Egbert
Michels. Emphasises the comparatively late development of
the Y at crland she griff ; concluded in the March number. Die
Arbeit steilung im geistigen Icben. Willi Hellpach. Die neueste
Entwicklungdes Syndikalismus. Christian Corn^ilissen. Deals

19133 HBOBKT MmoDlCAM AND NEW BOOKS 328

to a large extent with last year’s events in England. Die Juden
und dae Wirtschaftsleben (pp. 64). J. Guttmann. A searching
criticism of Professor Sombart’s book. Die Kaufkraft des Ocldea.
1. W. Egoerschwyler. a full analysis and criticism of
Professor Fisher’s ** Purchasing Power of Money ” ; concluded in
the March number.

March, 1913. Die naturphilosophischen Orundlagen der Wirtschaft8'‘
theorie. Prof. Bulgakoff (of Moscow). Zur Sysiematik der
Lohnmethoden, K. Kumpmann. Peir oleum -Monopol. Ueher

die Fortschriite der gcsetzUchen Begelung der Arbeits: 2 eif in
Frankreich. P. Louis. Die neue wohnungspolitische Oesetss-
gebung Oesterreichs. Karl Forcheimer. LUeraiur zuvi Petro-
leummonopol, T. M. Vogelstein. Der Gehurtenriickgang ,
S. Budge. A discussion of the ihoories of Prof. Julius Wolf.

Jahrbucher filr Nationalokonomie und Statistik (Jena).

February, 1913. Zur Agrargeschichie Schwedens im fruheren
Mittelalter. Karl Willgren. Die deufsche soziale Qc^etz-
gebung und der Geld- und Kapitalrnarkt. Hans Hilbert. Bin
neuer Verauch zur Retfung des Malihns* Julius Wolf.

March, 1913. Das neue Privilegiun der Oesierreichisch-vngarischen
Bank. B. Zuckerkandl. Wandlungen und Fjniwicldungsien-
denzen in der deutschen Answandcrung . W. Monckmeier. Der
Aufschwung der Fahrikindusirie in Kanada, C. Berger.

April, 1913. Der Kommunale Wohnungsnachweis. M. Busch.
Das Leuchidl-monopol des Deutschen Reiches. E. Schmidt.

Jahrbuch fur Gesetzgebung, Verwaltung und V olkswtrtschaft

(Munich).

Part IV., 1912. Theorie des Sparens and der KapUalhildung
(78 pp.). B- Liefmann. Der prcussische Staatsschatz und der
Reichskriegsschaiz. L. Katzenstein. The history and the prin-
ciple of the German war-chest. Bin Vorschlag zur Reiclisbcsiiz-
steuer. L. Sevin. Das Wirtschaftsleben der Vcrcinigien Siaaten
im ersten Jahrzehnt des 20. Jahrhunderts. E. Sciiultze.
Agrarverfassung und Grundsteuer in British- Ostindien (GO pp.).
V. V. Leyden. A summary mainly derived from second-hand
and out-of-date authorities. Nordarnerikanische Vniversiidtsein-
richiungen, G. S. Fullerton.

Zeitschrift fiir Volkswirtschaft, Sozialpolitik und Verwaltung

(Vienna).

Part I., 1913. Bine dynamische ** Theorie des Kapitalzinses
(pp. 62). E. VON Bohm-Bawerk. A discussion of a theory of
Schumpeter’s. Die handelspolitischen Beziehungen Osierreich-
Ungarns zur Tiirkei. Otto Hecht. Vilfredo Pareto* s Manuel
d*4conomie politique, Knut Wicksell. A criticism.

W eltwirtschaftliches Archiv (Jena).

January, 1913. This is the first issue of a new quarterly Journal,
under the editorship of Professor Bernhard Harms of Kiel. The
subscription to each volume, complete in two parts, is 20 marks;

324 THB BOOHOMiq JOTONAli' [JXTNK

the part now issued contains 876 pp. It is described as a Zeit-
Bchrift fiir Allgemeine und Spezielle W eltwirtschaftalehre^ and
is 150 deal with the economics of international relations in all their
aspects. W cUwirtschaft und Weltwirtschaftslehre. Bernhard
Harms. This article is in the nature of an introduction to the
Journal. Individuumund Welt in der Neuzeit. E. Tonnies. Die
WeltapuT der Eisenhahnen. K. Thiess. Das internationale
Wechselrccht. E. Meyer. Die Serversicherung im Weltverkehr,
E. Eitger. Die Internationale Organisation des Frankfurter
Metallhandcls. E. Liefmann. A large amount of space is
devoted to brief reviews and notes on new books, and to
Kollektivhcsprechungen, of which this number contains f —
Bibliographic relative au Commerce exterieur de la France, M.
Bellom. Ncuerc britischimperialistische Liieratur, E. Hoff-
mann. Die 7virtschaftlichen Beziehungen Spaniens zum latein-
ischen AmeriHa in der neucren spanischen Liieratur. F. Bernis.
Finally the number concludes with 35 pp. of monetary and
financial statistics, InicrnationaLvergleichende Statistik des
Geldmarldes der Bdrsen und der Warenmarkte, August^ Sep-
temher, October, 1912, which are exceedingly valuable, and by
including a number of extra-European countries cover a much
wider field than any other available source of reference. The
value of these statistics would be enhanced if they could be
published less than three months in arrear.

Scientia (Bologna).

March, 1913. Wert und Mchrwert. I Teil: Die MonopoUTheorie des
Mehr^wries. F. Oppeniieimer. Much concerned with what
happens when Robinson lebt mit Freitag in gcnossenschaft-
lichen Wirtschaftsverbande.”

May, 1913. The above article is continued, — 11. Toil: Kritik der
Marx schen Thcorie des Mehru'crfcs. F. Oppenheimer.

Giornalc degli Economisli (Rome).

February, 1913. Sulla distrihuzione della proprieid in Sicilia. G.
Bruccoleri, Gli odierni aspeiti delV cconomia agraria: le com-
binazioni dci faitori produitivi, G. ni Nola. The law of dimin-
ishing returns is discussed. Le origini del banco giro. E.
Inclimona.

March, 1913. La teoria del mcrcato moneiario. M. Fanno. With
Fisher, basing interest on “impatience,” and in accordance with
his own recent volume, the writer exhibits the relation between
the rate of interest and the prices of instrumental goods and
other points of monetary theory. Messina: come vive. G.
Mortara. a description of economic conditions in Messina
since the earthquake. La statistica della disoccupazione. G.
Montemartini. On methods of measuring unemployment.

April, 1913. 11 fnassimo di UtilHd per una collettivitd in sociologia,

V. Pareto. An attempt to overcome the difficulty of compound-
ing “ ophelimities ” pertaining to different persons. Le variazioni
periodiche dello sconio. G. del Vecchio. Referring to Jevons
and certain precursors, the writer describes different kinds of
monetary tides. L'annuario Statisfico lialiano per il 1912. G.
Montemartini.

1913]

BECBNT PBWpWCALfl AND NBW BOOM

325

NEW BOOKS.

English

Chapman (S. J.). Elementary Economics. London : Long-
mans, Green. 1918. Pp. x-i-169. 2s.net.

[This is a very elementary text book, probably intended for schoolboys. Professor
Ohapman's recent Outlines of Political Economy is described as a continuation of it.
At the end of each chapter there are questions with hinttf for solution. To be
reviewed.] A

Higginson (John Hedley). Tariffs at Woiff An outline of
practical tariff administration, with special reference to the United
States, and Canada. London: P. S. King. 1913. Pp. xiv-f-136.

net.

[To be reviewed.]

Hobson (J. A.). Gold, Prices and Wages: with an examination
of the Quantity Theory. London: Methuen. 1918. Pp. xi + 181.
3fi. 6d. net.

['* This work controverts current doctrine that attributes the sole or principal
causation to the increased ouiput of gold.” To be reviewed.]

Keltie (J. Scott), Edited by. The Statesman’s Year-Book.
1913. London: Miicmillaii I9i3. Pp. xcvi + 1452*. 10s. 6d. net.

fFiftieth Year. In this jubilee volume “ an attempt has been made in the
iuaroduotory matter and in the maps to indicate the contrast in certain aspects of
the states of the world between fifty years ago and tiow.”1

Mann (J, E. F.), Sievers (N. J.), and Cox (H. W. T.). The
Beal Democracy. London: Longmans, Green. 1913. Ppxi + 27r).
48. 6d. net.

[“Offeree members of the Rota Club, in these its first Essays, have sought to
explain and defend the principle of Property.” They oppose the present .state of
affairs. But they also oppose Collectivism or Socialism, and Syndicalism. To be
reviewed.]

Marriott (J. A. IL). The French Bevolution of 1848 in its
economic aspect. Vol. 1. : Louis Blaiie’s Organisation du Travail.
Vol. II, : Emile Thomas’s Hisloire des Ateliers nationaux. Oxford *
The Clarendon Press. 1918. Pp. xeix -f 284 + 395.

[The original French texts are here edited with an introduction critical and
historical. To be reviewed.]

Peel (Hon. George). The Tariff Beforaiers. London: Mothutin.
1913. Pp. vi+188. 28. 6d. net.

[An entertaining history of the politics of Tariff Reform from an unfriendly
standpoint.]

Penson (T. H.). The Economics of Everyday Life: A first
bock of economic study. Part T. Cambridge : Tiie IJni versify Press.
1913. Pp. xiii + 176. 38. net.

[An elementary text book intended for schoolboys or others who are taking up
the subject for the first time. This volume is described as Part I and does not
cover the whole subject. To bo reviewed.]

Collins (E. A.). Leasehold Enfranchisement: the case for and
against a practical scheme. London : P. S. King. 1913. Pp.
117. 28. 6d. net.

[« The author’s object is to show the serious effect which the present leasehold
system has upon the building trade of the entire country.” To be reviewed.]

Webb (Sidney and Beatrice). English Local Government: The
Story of the King’s Highway. Ijondon : LongmauB, Green. 1913.
Pp. x + 279. 78 . 6d. net.

[Reviewed above. ]

No. 90, — VOL. XXIII. Z

326

THK ECONOMIC JOCENAL

[JUNE

Withers (Hartley). Money-Changing ; An Introduction to
Foreign Exchange. 1-ondon : Smith, Elder. 1913. Pp. viii -1-183.
T)*. net.

[The outcome of lectures lately delivered to members of the Institute of Bankers.
To bo reviewed.]

American

Bl\kt:y (I.konard Stott). Tlie Sale of Liquor in the South.
Now Yo?‘k : Colunilua Univt'rbity IVosK. 1012. Ito. Pp. 56. 4^.

\CQlnmhi(t Vniversity Studies, 127. “The History of the Development of a
Nonna] Social Restraint in Southern Commonwealths.”]

Clark (John Jjatks) and Clmuc (John Maijrk^k). The Control
of Trusts. NfW York: The Macmillan Co. 1012. Pp. ix + 202^
4 Hr ()<]. net.

[Rewritten and enlarged by Prof. Clark with the oollahoration of his son. To be
reviewed.]

Cleveland (IhiEDEHicK .\.) and Powell (Fred Wilbur). Rail-
road Finaiiee Niov York . D. .\p])h‘ton. 1013. Pp. 463. 10/?. (Scl.

net.

[‘* The puppoRC /)f this volume is to describe the methods of financing Railroads
in the United States.” To be re\iewed.]

C'oPELAM) (Melvin Thom\s) 'T1u‘ (’ottou Manufacturing Industry
of the Cuited Stales. Cambridge' (U.S.V.). Harvard University
Press. 1012. Pp. xii-hH5. $2.

[Harvard Econoinif Studies VI 11. Reviewed above.)

Davis (William Watson). Th<‘ Civil War and Reconstruction
in Rlorida, New York (’olumbia Univ(‘rsity Pioss. 1013. Pp.
xxvi-f,769. 16.S*.

[Columbia Vnivositji Studie.s, i:!! The ejfe<‘t ot th(‘ Civil War on a slave-
owning State.]

Rarnam (Hi:nr\ W.). 'Fbe Ee.onomie Utilisation of History.
N(‘W Hav(Mj : Yale UniversitA Press, 1913. Pp. viii’h220. $1.25,

[This volume of reprinted essays takes its name from tiie first. Several of them
deal with labour legislation. To he reviewed.]

Ford (James), (’ooju'iation in New Fjiigland, Urban and Rural.
New York : Survey Associate's. 1913. Pp. xxi + 237. $1.50,

[Published by tlic Russell Sage Foundation. Reviewed above.)

Klee('K (Maky van). Woinon m tht' Bookbinding Trade. uNew
Yoik: Surv(‘y Assoeiates. 1013 P]>. xn + 270. $1.50.

[A publication of the Russell Sage Foundation j

Koo (Vi Kvpin Wellington). TIk' Status of .Miens in Cbiria.
New York: Cohmiliia UniAorsitv Ih'ess. (l^ondon: P. H. Rin^,)
1912. Pp. 359. lO.s.

[By the English Secv.-lary to tlie Prosidont of China. ColuwhUx Universifu
Studies, 120.) '

McCabe (Dvaid A.). Tbo Standard Bute in American Trade
Unions. Baliiinoit' : Juhns Ho])kins Ihvss. 1912. Pp. 251. $1.25.

[Johns Hopkins Cnivei sitjf Studies in Historical and Political Science, xxx-ii.
To be revii'wod,]

OGBUitN (WiLidAiM F.). Progress and Uniformity in Cbild-Labonr
Legislation. Ne\v Y(')rk • Cohinibia Uiiiversitv Pn ss. 1912. Pp
219. 7.SL * ^

[Columbia University Studies, xlvn in. A cnmparao.ve studv of State leffislation
oil child-labour in the United States.)

1918]

UECKNT PEBloDlCAtiS AND NEW DOOKS

327

liOBiNbON (K. V.). jiailroad Taxation in Mimiosota : Analyaiis
oi the Gross Earnipgs Tax. St. Paul, Minnesota. 1912. Pp. 58.

K ^uted from the third biennial report of the Minnesota Tax Couunission.
dewei]

Kobinson (E. V,). Tile Cost ot Government in Minnesota.
St. Paul, Minnesota. ^ 1912. Pp. 343.

[Eeprinted from the third biennial report of the IMinncsota Tax Commission.]
Seligman (Edwin R. A.). Essays in Taxation. Eighth Edition :
completely rc'vised and enlargi‘d. New York: The ]\Iuemillan Co.
1913. Pp. xi+707. 17«. net.

[This book was originally published in 18115 (reviewed in the EeONOMii; Journal,
vol. vi, p. 81), but, until the present, subsequent editions have not l)eeii
substantially revised. The present edition, however, has boon much enlarged and
considerably rewritten. To be reviewed. )

Streigiitoff (Frank Hatch). Tlu* Hist ’'ihul ion of InooincH in
llio United States. Now York: Colombia CniM'i'ity Press.
(London: P. S. King.) 1912. Pj>. 171.

[Columbm University /ics, 1‘29. To be reviewed.]

Wolfe (F. E.). Admission to .Vnuo’iean Ti’adc* Unions. Balti-
more: Johns Hopkins Press. 1912. P]). IBl. $1,

fJo7ms Hophins Universify S>driies in Historical and rolHital Science^ xxx-iii.
To bo reviewed.]

W(HH) (FREDEincK A.). The FinaiK'cs <d Woinout. New Y'ork :
Columbia Ihiiversity Press, 1913. Pp. 117. Js.

[Columbia University Sludics. lii-iii.]

Frntch

Bandeai: (Nicholas). Princijx's de la Science Morale et Politique
sur le luxe et les loix somptuain^s, 17()7. Paris: (noithiuo*. 1912.
Pp. xix4-32,

[Reprinted in the Collection dcs Econoimstcs with an introduction and analytical
table of contents by Professor Dubois, j

F]LEwy(*K (Ernest \ax}. iai Baiupje nationale de Belgique: les
Theories et les Fails, Brussels: lalirairie Falk fils. 1913. P]>.
VI i -f 380 -f 412. 15 fr,

[An elaborate history and account ol the BankV modo ut operations, partly
designed to repel Socialist charges against the hank. To be reviewed.]

Gjde (Charles) and List (Charles). Histoire des Doctriiu's
ficonomiques depuis les PhysiocTates jusipi’a nos jours. Paris:
Becueil Sirey. 1913. P]). wiii h 786. 12.50 ir.

[“Deuxieme Edition, revue cl augment/e. ” The iirst edition of this valuable
work was reviewed in the Economic Jouun.vl, vol. xix, p. 416. The new edition
does not appear to differ very materially from the first. ]

Moheaf (M,). ll<'('luuvln‘s oi Considerations sur la Popula-
tion dc la France, 1778. Paris' (buithner. 1012. Pp. xxx-f303.

[Reprinted in the Collection des Economistes with an introduction and analytical
table of contents by Professor Gonnard.j

Pierson (N. G.). Les Revenus de I’Etat. Translated into
French from tht^ second Diitcli edition by Louis Suret. Paris: Giard
k Briere. 1913. Pp. 386. 12 fr.

[This is taken from the fourth book of Pierson’s Political Econermy^ which has
recently appeared in an English translation.]

328

THE ECONOMIC JOOENAL

[JUNE, 1913

'* Skligman (E. K. a.). L’linpot sur le Reveiiu. Translated into
French by William Oualid. Paris : Giard & Bri6re.. 1913. Pp.
xii + 842. 15 fr.

Wagnek (A.) and Deite (H.). Traile de la Science des Finances :
Histoire de ITmpot depuis I’Antiquite jusqu’k nos jours. Vol. I.:
Depuis I’antiquite jusqu’ii 1815. Translated into French by E.
Botjche-ljcclercq. Vol. II. : Depuis 1815 jusqu’a 1910. Translated
into French by Louis CouEinct. Paris : Giard & Bri^re. 1913.
Pp. .x + 3274 371. 24 fr.

[This oompletcH, in five volumes altogether, the French edition of Professor
Wagner’s Finanzmissanschafi. Tho two volumes, referred to above, have been
translated from a recent German edition, which had been brought up to date'by the
author with the assistance of Dr. Deitc.]

<hr)a(m

Adler (Karl). KnjiitulziiiB iind Prciebewegung. Munich:
Duijoker k Huinblot. 1913. Pp. vii + 48. 1.20 marks.

[Bohm-Bawerk, the “ Productivity ” Theory of interest, the relation between
the value of the Vrodukte and the Produktivgiiter^ etc.]

PicTiT (Wkuner). ToyiibtH' Hall und die Englische Settlemeut-
Bewegung : ein Beitrag zur Goschichte dcr sozialen Bewegung in
England. Tubingen: J. C. B. Mohr. 1913. Pj). xi4-217. 5 inorks.

{Archiv fiir Sotialwisscnschaft und Sozialpolitik, ix. To be reviewed.]

Sand (E. W.). Die Ursaclien der Teuerung. Munich: Duncker
k Huinblot, 1913. Pp. vi-f-58. 1.50 marks.

Italian

Battjstella (C.). 11 concetto di reddiio in tcxuiomia, in fiuanza
ne] diritto finanziano. Rovigo : Tipografia Sociaie. 1913.

Masci (G.j. II concetto e la definizione del reddito. Napoli;
Pierro. 1913.

Pallottino (JI.). 1 ])aeHi miovi nel loro procedere econoinico.

Ancona : Puccini. 1913.

Sack (A.). The Peasant Land Bank in Russia, 1888-1910.
Moscow. 1911. Pp. xii + 607.

[In Russian.]

Samaddar (JooiNDRA Nath). Elements of Political Economy (in
Bengali).

[With an introduction by Prof. B. N. Sen. Professor Samaddar’s book olaimi
to be “ the first of its kind in the Bengali language.” It is primarily intended for
Indian B.A. students. To be reviewed ]

Waller (G. A.). The Problem of Social Economy. The Author:
Yungaburra, North Queensland. 1913. Pp. 91.

[Reprinted from the “ Tableland Examiner,” Atherton, North Queensland.
This brochure, on the first principles of economic social organisation, not without
reference, however, to recent Australian land legislation, shows considerable
ability and power of economic reasoning.]

THE ECONOMIC JOURNAL

SEPTEMBEB, i\)VS

A SUCCESSFUL SOCIAL EEFORMER, ERNST ABBE,

1840-1905.

In Past and Present Carlyle describes with great vigour and
j:»Qvver the divine mission which the “Captains of Industry “
might fulfil in their sphere of work among the “disinherited” of
the w^orld. In this special case his usual pessimistic tendencies
take an optimistic turn. Carlyle the prophet, the believer in
heroes, is sure of the coming of some great n^fonner, because lie
trusts in man’s equity, truth, and mercy. The picture h,e draws
of such a man bears strong likeness to tlie noblest Oerman
practical social reformer of modern times.

This great man w^as the late Ernst Abbe, for many years
Professor in the University of Jena, a great scholar in natural
science, astronomy, and physics, besides being a first-rate
mathematician. But he w^as also the owner of the famous optical
works in Jena, and founder of the “Karl Zeiss Institution,” an
establishment wdiose principal object is to try to solve the most
momentous of all problems — the social one.

Ernst Abbe was born on the 23rd of January, 1810. As the
son of a poor spinning overseer in a mill at Eisenach, he had seem
the degenerating effect on his father and others of fourteen to
sixteen Jjiours of daily toil accompanied by low wages, miserable
surroundings, poor food, neglect of family life and education. He
said himself, when Fortune was smiling on him and he had
become the owner of a prosperous business, that he could not
remember his father’s worn face and frame and at the same time
look on the workmen with the eyes of a capitalist. The boy’s un-
common intelligence interested his teachers, and means were
found for him to attend the grammar school at Eisenach, prepara-
tory to his being sent to the University. In Jena and Gottingen

No. 91. — VOL. XXIIT. A A

330

THE ECONOMIC JOTTENAL

[sept. •

he then studied philosophy, mathematics, and astronomy. After
taking his degree in 1861, he became a master at the Physicalis-
chen Vcrein in Frankfiirt-on-Main for two years, which post
he exchanged for that of a University tutor (Privat Dozent) in
Jena in 1863. He became Professor in 1870, and Director of the
Observatory in 1875. Up to manhood his means of subsistence
had been very scanty. Private lessons, some scholarships, the
solution of prize questions, had helped him on during these years
of study and teaching. The sternness of life fixed in him an
inherited taste for a simple way of living ; luxury in any form was
distasteful to him as an enervating foe to hardy manhood.

The year 1806 was the turning point in Abbe’s career. Karl
Zeiss, a mechanic in Jena, was at that time the University
optician. He constructed microscopes in the old mechanical way,
scientific principles being unknown to him. In 1866 he felt
convinced, how^ever, that mathematical and physical science must
come to his aid in order to bring his instruments to such perfec-
tion as was then needed for scientific and practical purposes. He
asked the young tutor to join his knowledge to Zeiss’s own experi-
ence, and Ernst Abbe accepted the offer. The man of science
now became a practical optician, and his superior knowledge and
skill soqn gained for the microscopes of the firm the reputation of
being the best in the world, a renown upheld to the present day.
Scientific researches combined with practical construction had
brought about this result, w'hich was completely achieved wiien,
in 1879, with a third assistant, Bcbolt, a young doctor of
chemistry, Abbe discovered a process for jierfecting the optical
glasses of his instruments. Zeiss, Abbe, and Schott founded a
technical laboratory for optical glasses, and this workshop took its
due share in the work and its successful progress.

In 1875 Karl Zeiss, the owmer of the optical wwks, asked his
assistant to become his partner in the business, and Abbe
accepted.

Microscopes were not the only instruments to which this
creator of (he w'ork of the optician as a science turned his atten-
tion. The director of the observatory soon became the manufac-
turer of the incomparable Zeiss telescopes. J^hotography and
photographic j)r()jtic1ion also awakened his interest. The brilliant
epidiascope , micro-photographic apjiaratus , improved cameras ,
the tele-objeclive were fruits of his researches in that sphere.
Topographers, architects, engineers make use of Abbe’s spectro-
meter, refractometer, stereoscope, stereo-comparator, and photo-
theodolite. The material and construction of the instruments are

1913] A SUCCESSFUL SOCIAL EEPORMEB, ERNST ABBE 331

of first-rate quality. No wonder that in spite of the high price
which the instruments command, the firm has no need to fear
competition. The instruments which serve for scientific experi-
ments are not patented, lest the course of progress might be
hindered. Abbe did not believe in the infallibility of his own
brains, and gladly accepted scientific help from any quarter
whatever.

lu 1888 the founder of the works, Karl Zeiss, died. His son
quitted the business in 1889 after having received his legal share.
1’he Gei*nian professor thus became the sole proprietor, and his
fortune would have been sufiicient to permit, him to enjoy tlui
leisure which is commonly the accompaniment of w(ailth.
Neither his own nor his family’s inclinations, however, lay tliafc
way. Their viev.’ of life had renuuned ideal, showing no love for
self-aggrandisement and self -absorption, and were permeahvl with
a deep-felt responsibility towards all those in their 'employ, both
officials and workmen, but especially the latter. Abbe’s altruistic
sentiments took definite form as soon as the opportunity for their
exercise presented itself.

The professor, scientist, manufacturer now bccaino a modern
social Reformer of the most radical kind : not a theorist or
visionary like Carlyle, but a man of action, tlie exccifi^^r of his
owm ideas. They had long been pondered over. On the 1st July,
1891, the fruit was ready for plucking. Ernst Abbe, the sole
proprietor of the optical works, divested himself of his ownershij)
by incorporating them in the so-called “Karl Zeiss Institution,’*
bestowing on it his fortune of more than 11110,000 to carry out the
social reforms he had in view. He himself became one of the
managing officials of his institution, a servant where he once had
been master, submitting beuceforth to the statutes as any other
ordinary employee did. The Optical Works was now the. legal
ownei, controlled by its own statutes. It is well w^orth while
taking a look into tliis document of perfect jurisprudence.

The aim was fourfold : Firstly, cultivation and continuation of
the various branches of industry carried on in the establishment,
consolidation of its pecuniary interests as a means of sustenance
for the several thousand persons employed in it and the making
it a useful instrument in the service of scientific and practical
pursuits. Secondly, the fulfilment of more comprehensive social
duties towards officials and workmen than a singk*. owner could
guarantee for the future when the works would be under his
control no longer. Thirdly, arrangements for opening up oppor-
tunities for a b^ter education pf the working classes, not only of

A A

332 TH^ ECONOMIC JOURNAL [SEPT.

khis establishment, but also of the town and its environs. And
last, not least, a liberal subscription to the University funds,
especially on behalf of natural science. Abbe, the man of humble
parentage, paid the debt he owed to science more than a thousand-
fold. Since J891, above ;£200,000 has been given to the Univer-
sity of Jena. New chairs have been founded for several branches
of natural science, salaries regulated, and many buildings erected
for scientific research. The new University buildings could
scarcely Imve been built without the ample assistance of the funds
set aside for this purpose. Abbe never forgot, and said so openly,
that ‘the success of his methods was due to the combination of
stuerice and practic'c scuence being the primary factor.

The form of government of this small community is that of a
co-operativt‘. society, witlj a well-educated and intelligent board of
iiiaiiagers. Al)bc neveu’ thought of putting the executive power
into the hajuls of the workmen. Though he was at heart a demo-
('I'at, and his sympathy was keenest with the poor, he knew^ too
well the high value of mental cultun*. His idealism had always
been tempered by his conmioii sense and e.xperience. No Utopia
fur hi]n, and thcTefore no such failure as Kuskin experienced with
liis St. (leorge’s Guild.

I^he actual control of the works is vested in the “Karl Zeiss
institution." An olTuual of the (iovernment of Weimar is engaged
in his leisure^ hours to superintend the carrying out of the various
provisions of the statutes, but has no power given him orer the
business o})erations of the works. Abbe never meant to make the
firm a lucrative field for spe(*ulation and accuinulaticm of riches.
Should it ever sink to that level the institution was to be dissolved,
th(' works sold, and the sum total given to the University and
other establishments for public wolfare.

d'he administration of the internal affairs is attended to by a
hoard of managers with partly scientific, partly technical, and
partly commercial functions. It is really a republic on a small
scale. The committee consists of the heads of the various depart-
ments. One of its members is chosen as authorised manager of
the whole works. The coniinittet* a])p()int the head engineers for
every branch of mauufatdure cairiinj on in the establishment.
They superintend tlie reserve funds and dispose of the surplus
according to the statutes. Abbe himself became the first repre-
sentative trustee. None of the members of the board get a share
of the clear profits paid to every other official and workman at the
end of the year. Abbe wanted them to be quite independent of
personal motives when fixing the percentage, actuated solely by

1913] A SUCGESSPUIi SOCIAL EBFOB|lIEB, EBlstST ABBE 333

fairness and justice and guided^ty the actual state of the funds.
Neithef are they allowed to increase their incomes by oilier
private occupations. Their salary is never to exceed tlio tenfold
income of an average worker of more than twenty-four years of
age who hg,s been employed in the works for at least three years.
The salaries of the officials are to depend on the average returns
of the business. The fixed wvages of a workman twenty-four years
of age amount to about £100 a year. Thus the salary of a manager
does not exceed the tolal sum of £1,000. That seems little
enough considering the great responsibility laid upon him. Abbe
knew well enough, too, that sonie of these capable birsiness
men might prefer a more lucrative post, but the materialistic
bent of such minds had no room in a progiamme which
could only be carried out by men who were intellectually and
morally of the aame cast as the founder. TI}) (o the present
his confidence in the integt ily of human nai uro *has not been
misplaced.

Every branch of the iiidusiry is n‘sp(rliv(‘ly superintended by
a body of offiedals appointed by the ditvdors The bead of each
brand I is one of the inem])ers of the managing board.

So much for the iub'lledual headshi[) of the' firm. The com-
plement to this uffieial organisation is the pinvisiou for the low(‘r
officials and workmen, Idiis is the work of a real friend of the',
people, a social act and an exhihitiem of politi(‘al (X‘onomy in its
widest sense. Moreover, its chied value lies in the faed. that it was
not given under any obligation to the* weirkmem as aii alms or as
the outpouring of gemerosity and eharilahle' fed ing. It was the
epitome of justice, the realisation of the rights of the inferior
(dasses to what was due to th(‘m not only in tlu^ form of decent
wages and regulation of working hours, hut also of op])ortunilieB
for recreation and tlie cultivation of their minds, and of a. sufficient
income in case of sickness, disablement, accident, and old age. In
a word, real dcmoc*,racy was evolved. There should hv no obliga-
tion on the jiart of the recipients, they took hut what rightly
belonged to them, no more, no less.

The relationship between einploy^*r and em])loyed was stricdJy
legal. The moral obligation on the jiait of the worknuin con-
sisted in doing his work to the be.vst of his ability, and in behaving
himself decently to all connected vith him in the factory. Tnde-
]jendence of thought and action in religious, social, and political
matters was fully guaranteed, and tolerance exercised in its widest
sense. Compulsory absence from work on account of public
duties is not followed by a suspension of payment. Party

334

THE ECONOMIC JOUBNAL

[sept.

interests, the formation of clubs, unions, Sic., the competence and
election of the board of labourers, are subject to no restriction or
interference whatever.

(Tovernrnent is not allowed to contribute to the pensions or to
tue sick and old age insurance funds, neither do the officials and
workmen. This duty devolves solely on the works, which have
the benefit of the entire mental and bodily exertions of the
workers; hence the provisions made in case of disablement, sick-
ness, and old age a.re l)iit the returns for what was spent on their
behalf. To do full justice to this original scheme of Abbe’s, we
mush look into tlK’s details of the legislation of this little
comiiiunit y.

ddu' r.)|)id a fid splendid development of industry and com-
merce, also of the hrantdi Ahhe superintended, is based on a
pro}>erly onfamycd dinsio)} of labour. At the same time, Abbe
realised that the' work \^ould hecome monotonous in course of
time to the x^orknian. It is not so interesting nor so full of
variety as that performed by the artisan of old. Still, it is im-
possihU' to turn lau'k th<' wlu^el of timcu Tliend’ore the disadvan-
tages and dravA hat‘,kf; of the systejn nnist be equalised by a
(vjinpensaf ion given to those who suffer from its evil consequences.
'\t)bt' tried to accouijilish this by raising the tone of the workman’s
private lib* and improving its moral and intidlectual conditions.

When he was asked what had induced him to take this step,
his answer was characteristic : “T said to myself vdien I beeame
the sole ()\\uier of the business with several thousand people
dependent on me, that it was my duty to bring about such condi-
tions in the work and life of my fellow-workmen as would also
permit me, without hurting my pride, to be a simple artisan in
these workrooms.”

1lie wages art' either at a fixed rate or according to piece-
work. ddie legal minimum wage can never be reclueed, only
raist'd. .No (onimercial crisis can lower it. The reserve funds
are to Ix' draw ji on largely in times of commercial crisis. Losses
aiid damages are not to be laid on shoulders feeble enough even
in good times. Wagt's paid for piece work generally amount to
uiore than the legal minimum Ihit. should it occur that tlicy
do not coint^ up to this standard, the legal minimiirn due to the
worker is alrt'ady settled. In the course of the year the works
are closi'd oji twelve days (Easter, Whitsuntide, and Christmas),
hut wages are not susptuided, and every man has a claim to a
foi'tnighCs holiday in a>ddition, his pay being continued for half
the time.

1913] A SUCCESSFUL SOCIAL BBFORMBB, EBNST ABBE

336

These wages receive an addition at the end of the year through
the distribution of the profits, which on an average have been
about eight per cent. No dividends are paid to the creditors who
invested their money in the business. They reap their 4 per cent. ,
no more, no less. Those who bring in the harvest are benefited
by it. Abbe is not the only manufacturer who grants a share of
the clear profits to his workmen. Freese in Berlin, Dr. Schott
in Jena, Godin in France do the same; but they bestow it as a
personal favour, whereas it is Ihe legal duo of “the Zedssianer,”
as this working staff is called. Carlyle’s question whether or not
“the master may grant his workers permanent interest in his
enterprise and theirs that it really may become a joint Enter-
prise, ” was answered by a timid and hesitating on his

part. He knew the difficulties, thong li he warmly desired such
results. Abbe’s beaily “Yes” is tlie fulfilment of (Carlyle's faint
hopes.

The Scotch theorist and the German practical social reformer
were of one mind as to the basis on which all organisation a.nd
its success are founded. If. is the j>rinciple of forming permanent
contracts with the workmen instead of temporary ones. An
official or workman once engaged and tried for six months cannot
be dismissed after this time by the firm unless heavy moral
charges are brought against him. If it does happen, ^tl.e man
throwm out of work can take legal proceedings against the firm,
and it is for the arbitration courts for trade disputes to decide
whether the works shall jmy him compensation. The sixth part
of the salary or wages paid to him since his entrance into the firm
are his due. We see the demands of the Socialists for an Insur-
ance Act for those thrown out of employment arc here acceded to
voluntarily. The practice of so many masters of taking on
labourers when orders press, and unscru])ulously dismissing them
when no longer needed, cannot be carried on in this establish-
ment. The indemnification in case of dismissal is to be paid out
of the reserve funds. Thus the victim is enabled to look out for
other employment without enduring misery after his discharge.

Another way was found for alleviating lh(i lot of the working
classes by diminishing the working hours. When Abbe first
entered tihe business in 1875 twelve hours were the rule, reduced
after a time to nine. When he heard that the Knglish Govern-
ment had introduced eight, hours’ daily work in the Woolwich
docks without lessening tfie pay, that, moreover, neither the
quantity nor the quality of the work bad suffered from this deduc-
tion, he gladly adopted this measure in 1900, after having tried

336

THE ECOKQMIC JCMJENAL

[sept.

the experiment in his works for a year on workers who were paid
by piece work. The labourer being fresher both mentally and
physically, the results of the experiment were even better than he
had hoped for. Eight hours each for sleep, w^ork, and relaxation
have done their best to make the Zeissianer the so-called
aristocrat of the working class.

For several years a half holiday was given to all employed by
the firm on the 1st of May. It was considered to be a concession
made to the many Socialists among Abbe’s workmen. He really
did it in memory of the 1st of May, 1848, in England, when
that Bill was passed which forbade women and children to work
longer than ten hours a day in cotton mills, the first step to the
“Hours of Ijahour Bill ” that followed for botli sexes. In politics
Abbe favoured fri'c trade ; l)ut man’s h(‘alth had to 1)0 protected
by legislative enactments.

The thirtl link in the chain of his organisations dealt with
insurance for old age, disablement, and death. Neither the
State, the officials, nor workmen are allowed to c(mtril)ute to the
reserve funds for these purposes. The business absorbs the
strength of the employees who grow old in its service, and it is
but just thai. the paying l>ack of the debt shmdd fall to the share
of the firm which has reaped the benefit. State and miinici[)al
officials pay no extra premium, why then should those do so who
are generally worse ofT than they? An additional safeguard is
the compensation paid in case of arbitrary dismissr.!, Toi' Abl)(‘
called an insurance without this support “a knife withf.ut an
edge.” Seven to nine per cent, of all the salaries and w^nges ])aid
during the year, therefore, go to the reserve funds to supply
present and futun^ needs.

Every official a.nd workma?! who entered the husiness hefuc^
his fortieth year, and who has been einj)loyed for five years, is
entitled to a pension in case of disahlement. Should death intc^r-
vene part of it is passed on to liis family. The sum, if withheld, is
recovenible by law. A man is entitled to such a pension from his
twentieth year. Abbe caused the pension to be rc^gulated accord-
ing to the fixed salary or wages paid. After fifteen years of
service its rate ainounts to 50 ])er cent., increasing yearly by
1 per cent, up to 75 per cent, after forty years of work, the
same as is granted by the State and municipalities to their
officials. The })ension for old age is based on the same percentage,
and is granted to anyone who has betn employed in the business
for at least thirty years. At the age of sixty-five everyone is
entitled to it. In case of a man’s death, his widow’s annuity for

1913] A SUCCESSFUL SOCIAL EEPORMER, ERNST ABBE

337

herself alone consists of two-fifths, with one child of three-fifths,
with more than one of four-fifths of the sum which the husband
would have got himself.

The organisation of the workmen’s sick funds runs on
similarly just and generous lines, although a premium has to be
paid by the insur(‘d too. During the illness of the head of a
family or one of its members three-fourths of the fixed wages, but
not exceeding five shillings a day, are paid so long as the illness
lasts, even if it be for a year or more. The doctor’s fee, medicines,
or, if need be, treatment in hospital, fall on the sick fund.
Women after confinement receive a subsidy of three-fonrths of
their husband’s wages for six wrecks. Th(' payment made in case
of the death of a wurkman himself amourds to iwau’^y times the
sum of his daily earnings, for tht; death of his wife it is two-
thirds of that simj, and for a child a fixed amoimt of one pound.

The jinuriium for Ihcse insurances is 1 per. cerd'. of the wages
not exceeding five shillijigs a day. Of that sum the firm pays for
a single man five-eighths, for a man with a family three-eighths.
A bacludor suffers a weekly deduction fu'm his wages of per
cent., a married man of 2^ per cent. Hie book-keeper is paid
by the fian. The administration is in the hands of a committee
composed of ^vorknien. Thv. firm only possesses the right of veto
should a change', of premium, or of the statutes, or th« l"-caking
up of the sick fund be jilaniied by the board of workmen.

To avoid illness as much as possible the young w^orking men
are periodically examined by doctors, and instmcdaou is given
them in hygiene, all at the expense of the firm. The sanitary
regulations in the factories are exemplary. Daths may be had
gratuitously at any time of day. The half-hour’s work missed
must be made up for in the course of the wc'.ck. Alcohol is not
permitted during working hours. Milk, mineral waters, c'C'C., are
furnished by the firm at cost price.

There arc large grounds for football and other sports, whilst
part of a wood in the neighbouring mount oins is reserved for a
f)leasure ground.

Abbe abstained from building house's Lor bis workmen. He
did not approve of imposing restrictions upon tliem in jirivate
life. But money is readily advanced by the firm to the building
society of the town, and hundreids of /eissianer have their own
snug cottages and pretty gardens.

The workmen’s interests are looked after by a board of
labourers founded by the master in 1896. Its members, above
one hundred in number, are elected by ballot of all the w^orkmen

338

THE ECONOMIC JOURNAL

[sept.

above eighteen years of ago. Seven of them chosen from among
its members form the officers. They liave the right of appealing
to the head commitlee of directors in all internal affairs of the
business relating to their welfare, and although the final decision
lies with ttu^ hoard of managers, freedom of spec'ch is permitted.
Abbe said himself that- much good liad come from the joint work
of both corporations, and the statutes leave the way open to
further reforui and improvement. Standing still was not on the
]irogramme of this man of modern natural science. He believed
in evolution in the widest .sense of the term. Ruskin’s
rnodifcvalism sapped IIk* life-ldood of the Rt. George’s Guild ;
Abbe’s idealism was rooted in the [^resent state of things, making
allowaaice for future' expansions.

The disinterostt'dness of the donor e'annot be questioned. He
rejected vehemently all e'nde'avours to bestow worldly honours
upon him. He never looked upon his donations as gifts — they
were ilif', natural obligations of a higlier human equity. He
possessed a mind “graduated in Heaven's stern I^niversity,”
ddiat is the M‘ci(*t of Ids suc(*ess. “Ttumanitv always pays best,”
says th(' Seotcb poliiical ('('onomist. Rueb is the ease bei’e. The
works a, re being extc'iidcd from year to year, an ('xternal jiroof
of their tinanc'ial siu'cess, and the physical, moral, and mlelleetual
c(»riditioij #of the woiisinan bears evidi'nci' of bis improvement,
wiibout. meiilioning Ids Ixdb'H'd circumslaiu'^'s ])ecuniarjly.

ddie. portrait of this man of geidiis would remain imperfect
without some mention of the institutions founded fiy him for
shedding fulU'r light, in the intellectual world. Tlie subviudion for
the University of Jena has already been alluded to. tt is so
considerable that the vox popnii has deelarc'-d Ablx' the fifth and
greatest supporter of it, the others being tlu^ rrincipalities of
Raxe-Weiinar, Mcdningen, Kohurg-Gotlia, and Altenhurg. Jena
can boast of a llnivcrsitv eijiuil to the best in (lermany. It has,
moreover, the reputation of being the stronghold of the utmost
lilx'rty in si'i(*ntitic research and instruc.lion, a ])rivilege for which
Ai)l)c sti])ulaled, should the subvention be continued. Rcience
siibservi(*nt to labour, lids eombination was llu' banner he carried
in forming his social ideas.

Intc'llecJual culture is not- to he gained only at the Uidversity
in J('na. Ofqioriimities fur mental inijirovemeiit are offered to
everyone by the most conspicuous of Abbe’s gifts - the “i^^nple’s
Hall as he termed it. The spl(>.ndid renaissance building
contiains reaiiing rooms with more than a hundred newspapers,
German arid foreign, of the most diverse iiolitical tendencies;
more than three hundred magazines, paiuphlets, and encyclQ-

1913] A SUCCESSFUL SOCIAL REFORMER, ERNST ABBE 339

paedias in every branch of science and ari, readinpf rooms for
adults being also provided. A vvell-stockod cinMilafing free library
of more than thirty thousand volunu's, both in literature' and
science, is at the disposal of everyone. And the fee? tjuiei
orderly conduct so as not <o disturb other i*(nidcrs- d'oi* the
use of the library one’s signature with any further security.
So far this ap])eal to man’s honesty and self-n'-sponsihiliiy lias
proved the best policy. Another wing of the f)iiilding contains
class-rooms for a commercial school, several lecdire-roorns, as
well as apartments reserved for exhihilions of art. The most
beautiful of all is the large music hall capable of holding more
than two thousand people. (Massieal innsK', well performed by
choir, orchestra, and first-class soloisis edify both mirul and
soul. This music hall also serves for leeliuos delivered to a larger
audience than th^- o' her rooms liold I 'nivea-sit y vac'ation courses,
political na'^'tings. Ac., take, plare here. • •

Buch is Abbe’s last will and testament. he(|ueatlied

philanthrupY allied to truth aaid jnstiee, to his own and fnlure
generations, after having given palpahh' proof of lU. henolieial
influence on the working classes durmg llu' many V('ars of his
arduous labour in Jejia.

Abbe had died in 1905. (In Ihe 5jh oi Ih'hriMrv, 101). the
four princely supporters of JoTia I'niversity dedieaUal a bust
to his memory. It was placed in the college hall amongst
those of princes who liad at one time or anothc'i' been (‘on needed
with the Alma Mater. His wide circle of friends and admirers
paid their debt of gratitude on the 30th of tfiily, 1011. OOie
monument erected in front of his owm small hous(', the w^oi’ks
and the People’s Hall is a little toinpU'. It eiu, loses the marble
bust chiselled by the great (ierman sculfitor Klingt'r. Allegoric,
reliefs at the base allude to Ahluds scientific and tecdmical
significance. Four reliefs in bronze by ]\h'unj('r oji tlu' four sides
of the temple illustrate “labour,” thus di'picling tlu' whole (airei^
of the hero.

But gratitude to Abbe can scarce he sliown in visible, form. It
corresponds with his own idea of the mat(<*i’ -to make, free arul
profitable use of all the means offered Ihrough his institution in
order to acquire a better mode of living, instruclion, literary and
musie.al entertainment, liigber enliure -to gid. nearer to man-
kind’s real destiny. Emerson’s words, “Only that good profits
which we can taste with affi doors ofx'ii and which si'.rves all iru'n,”
expresses a gospel which was nut only preached hut lived by
Ernst Abbe. 1. (iLATziia

Husum,

FINAIsCE OF RAILWAY NATIONALISATION IN
GREAT BRITAIN.

When such a MTiier as Mr. Acworth, a distiDguished authority
on railways, who is liimself unfavourable to their purchase by the
State, declares nationalisation inevitable, it is time to discuss the
probalde consequences of such a change. It would involve the
largest financial transaction ever carried out ; theory should throw
some little light on the future of the thousand millions sterling
involved, and even faint illumination is worth seeking in such
a case.

The transaction would consist essentially in excJianging
Government stock for the existing lailway debentures and stock.
The ordinary shareholders would have to be bought out com-
pletely, f6r they could not be left with any share in the business
unless they shared the control to some extent. Hence there would
be no reason for the issue of more than one kind of seemity .n
exchange for debentures, preference, and ordinary stock. Th(‘.
first question is as to the amount.

Dchcnturcs . — The security of British railway d(‘bontures can
hardly be improved even by the guarantee of the British Govern-
ment, so th(^ Government could Jiot do less than guarantee to
the holders their present income. The sajne may be said, prac-
tically, of the “guaranteed” stocks. The nominal total of
debenture and guaranteed stocks is about T*170,000,()00 : there is
a great quantity at 21 and 3 per cent, which is below^ par, and
only a little at high rates, quoted above par. Hence the market
value is only about .LI 00 ,000 ,000, and the yield about 3*85 per
cent,, or £15,400,000 a year. This the Government would have
to take over.

'The prefcrcuct’ stoeJis of the leading railways are nearly as
good as the debentures, e.g., L. and N.W. yields 3*88 per cent.,
G.W. 3*97 per cent., G.N. and Midland 4’00 per cent. The
nominal total is given as £350,000,000, the market value is a
little under £300,000,000. It is possible that the owners might

SEPT,, 1913] FINANCE OF RAILWAY NATIONALISATION

341

consent to a slight reduction of income in exchange for a Govern-
ment guarantee that would increase slightly the market value of
their stock. We may suppose the interest charge of about
ill, 600, 000 reduced to, say, £11,000,000 : though it is doubtful
whether the owners would think it a good exchange.

As to the ordinary shares, their value is so variable that it
would probably be better to deal with the companies rather than
the shareholders, and allot each company a certain amount of
British Government railway stock, and leave the company to
distribute this among its shareholders. The amount of stock
might be based uj)on the average profits for a few years past ;
thus, in 1910 the balance after paying debenture and preference
interest sufficed to pay 3' 18 per cent, on a nominal capital of
£492,000,000 or £17 100,000. At how many years’ purchase
should this be capitdiised? The most important ordinary stocks
yield, at prebent, round about 5 per cent., which is equivalent to
twenty years’ purchase , but this does not include shares in com-
panies which are gradually working up to a better financial position,
such as South Eastern deferred, Great Confral ordinary, &c. As
the Government would be buying out the prospects as well as the
immediate dividends of the shareholder, the price could hardly
be put at less than twenty-two years, if the matter rested only on
general principles of equity. •

But there is an Act of Parliament (7 & 8 Viet., C‘h. 85, 181-1)
which practically guarantees the railways twenty-five years’ pur-'
chase of the “divisible profits estimated on the average of th(^
three next preceding years,’’ should the Government take over the
lines constructed after the date of the Act. As there is no right
of purchase of the earlier railways (which include iinjxirlant main
lines) there can be no doubt but that the Government would have
to give at least equally good terms for these. “Divisible profits ’’
would probably be taken to mean something more than the divi-
dends actually paid, so that twenty-five times £17,100,000 or
£127,500,000 is rather an under-estimate of the price. If we add
6 per cent, we should perhaps get about the figure that an arbi-
trator would adopt.

Government Stock. - Jt is oul of the question to issue this at
anything like the present price of (’onsols. The leading stocks
give (April, 1913) the following yields : —

Consols / at H-39 per cent.

Local Loans. .. ... 3 at HS ... S'5H ,,

Irish Land 2| at 73J . . . 3-72 „

The first is being redeemed steadily, the last is being issued, and

342

THE ECOKOMIC JOURNAL

[sept.

there is accordingly a marked difference between them. If
Government were to issue vast quantities of new stock it could
not expect a better price than is paid for Irish land stock,
especially ns it would have to be taken by railway debenture
holders wlio are usc^d to getting 3f to 4 per cent, with perfect
security, li tlie noininal rate of interest were chosen so that the
])rice would be near jjar, and that is probably the wisest plan, it
would have to be 3| pci* cent. Assuming this, for the moment,
we require : —

For ordinary sliaroR, say . JB446,(X)0,O00 at par.

bbr prior chargor. X704,0(X),000 to yield the aimuitien stated.

Total i*1, 150,000, 0(X)

If a lower nominal rate of interest vv(in' ado])ted nothing would be
gaintid ; and, moreover, the market would hardly accept any
stock without* a g’liarantee against conversion for some time to
come; the present debenture lioldei-s have, in many cases, a
practical guarantee of this kind in the fact that their stock is
mu(di below par, and in other cases it is irredeemable. We will
assume (or the*, sake of argument that the new stock is made
irredeemable for twenty years.

Sinking Fund , — IN ext, the question of amortisation. What-
ever muy'be the policy of the companies, it would not be wise on
the part of the Government to assume that railways are going to
retain their value for ever. Like other inventions, Ih^y are at
the mercy of new^ inventions : the only permai^ent value lies in
the fretdiuld — the wayleaves. As the land was acquired at an
excessivt^ price, its value is only a small part of the present capital
of ilie rail\va\.s; and even as wayleaves, railway ground has
i’aet^ imkiiowu future competition from the roads, and the air.
For Ihese ieasons it seems indispensable to provide a small
sinking fund, say } p('r cent., which would redeem the stock in
aboil I ejglily years.

If the above (estimates may be taken as i-oughly correct, tiie
Government would have to undertake the issue of at least
.id ,150,001), (>00 ot stock bearing 3.^^ inteiest and ] sinking fund
charge, and ineonveitible for twenty years. The total charge
would b(‘ 1' lb,000,00t) a year. This is nearly eijual to the present
net jirotits of the railways; as w^as, of course, to be expected.
Kheturical exaggeration as to the savii^ig due to national credit is
common : but on any careful study it is clear, that there could be
no great immediate saving except by confiscation. It is to be
noted that ‘‘watering” of capital by the companies in the past

1913] FINANCE OF EAILWAY NATIONALISATION 843

has no bearing on the calculation, which is based only on the
actual yield of the railways at the present time.

The fact that there would be no immediate surjdus of any
magnitude WTmld be a very strong barrier against a policy of rale
reduction or a policy of improved treatment of employees, and
would therefore disappoint those most concerned to push nationali-
sation. This, how'ever, leads to questions outside the scope of the
present paper.

What we are conceriu'd with is whether the purchase is likely
to be a good one at the price. That depends partly, of course, on
the changes in business -on the real ]>rogrcss of Britain, but also,
in a more calculable way, on monetary changes, /.e., m the course
of (i) prices, (ii) the rate of inter(*st.

The level ot‘ does not duecTly aflect the transfer, but it

would aflect the auK^rtisatiop, ii, as suggested here, the Govern-
ment decided to carry that out. ^I’hus, BU])])os*ing 'prices were to
go on rising i’oi a long tiiiis', the repayment of debt would be
made in currency of less value than that of the present day, and
the nation would acc'.ordingly be receiving a bonus on its pur-
chase ; and, conversely, if prices should fall again. This effect,
how^ever, even if it could be foreseen, would be unimportant, as
the cost of repayment (by a i per cent, sinking fund) is only one-
fifteenth of the cost of interest. *

The financial success or failure of railway nationalisation
depends chiefly on the course of the rate of interest, as this
affects both earnings and exj)enses. But before discussing the
way in which tliese are affected, one must recall briefly the causes
of variation in rate of interest. The most important of tiiese are
the degree of security offered by the borrower, the rise and tall of
prices, and the demand for loans as compared wdth the supply of
loanable capital.^ A rise in inliuest due to the last of tliese causes
means that trade is really prosperous over the world generally,
so that owners of capital are able to get a larger return for it :
but if there were a rise due to insecurity it would be quite another
thing ; while a rise due to depreciation of money (i.e., rise in
prices) produces profits that are partly fictitious.

Accordingly, if, after the railways had been bought, the market
rate of interest were to rise on account of increased demand for
capital, the general prosjierity that this indicate.d would be shared,
to a greater or smaller extend, by tiie railways ; their jirofits would
grow, whilst there need l5e no great increase in expenses, as
materials would not be dearer, and though w^ages w^ould probably

^ Lelileldt, Economic Journal, March, 1912.

344

THE ECONOMIC JOUBNAL

[sept.

rise, they should not absorb all the increased receipts. In this
case, then, the Government would have made a good bargain, like
anyone who buys a business that afterwards improves. But if
the rate of interest (due to general trade activity) fell, these
results would be reversed. In the case of a company such
fluctuations are borne by the proprietors of the ordinary shares.
Now a r4overnm('nt railway is financed entirely by bonds, so that
its net revenue is j)articulariy sensitive to changes.

If the market rate of interest rose, not because capital was
more actively demanded to promote new enterprises all over the
world » hut merely because of the depreciation of gold, working
expenses would be increased, as stores would become more expen-
sive, and the rising cost of living would give employees a strong
claim to increased wages that could not be resisted. Hence the
gain in railway traffics would be partly neutralised ; but still, as
the capital of the railway would bear a fixed rate of interest,
there w^ould be some margin of profit to the Government, wdiich
would really be gaining at the expense of the bondholders. In
the opposite event, if gold were to appreciate, the rate of interest
would for that reason fall, and bondhold(‘rs w'ould gain at the
expense of the Oovernment, which w^ould be embarrassed by
falling traffics. It is, indeed, w^cll knowui now that periods of
falling prices are favourable to bondholders, and those of rising
prices to shareholders.

It is not high prices but rising prices that make the rate of
interest high ; as prices are rising now', and have been so for
more than a decade, it w'ould take not merely a continuation of
the rise but an acceleration of it to raise the rate of interest
further. On the other hand, it does not need a fall in ])rices to
reduce the rate of interest ; if prices merely became stationary
that effect would be produced. Hence one can hardly avoid the
conclusion that a further rise in interest due to this cause is
unlikely. Professor Irving Fisher has lately attempted to forecast
the future of prices,^ and gives weighty reasons for thinking
that the rise wdll continue, but even he hardly goes to the
extreme of predicting a faster rate of rise than has taken place in
the last few years. ^

It is hardly possible to forecast the true demand for capital aUd
its effect on the “normal’' rate of interest — freed from the mflu-

1 Fisher, American Economic lUvisw, September, 1912. This important article
lays stress on the development in the use of cheques as the chief influence causing
prices to rise. Prof. Fisher has douo a service in bringing this influence forward
prominently, thougli some of hia conclusions appear to be overstated.

1913]

FINANCE OF BAILWAY NATIONALISATION

345

ence of price changes. The demand for capital to open up new
counn'ies is extraordinarily large a.t present, and outruns the saving
power of England and France—the only countries that have much
to spare. It has been observed by several writers, among them
Mr. Hobson,^ that an exceptional amount of capital is being put
into enterprises, such as railways, in new countries, which do not
yield much return now, but will increase vastly the production of
raw materials later ; and this makes the “normal ” rate of interest
high at present. One can only remark that a falling ofl' is, at
least, not unlikely. On the whole, it looks as if these two main
influences — the demand for capital and I lie value of gold- .would
be likely to act in a sense unfavourable the purchasing Govern-
ment. At first sight it might seem os if a time like the present
when debentures ar.d other securities at fixed interest are quoted
low, is a good time for the Governnuuit to purchase, but the
above considerations sliow that it is not.

The main influences just discussed might ad in either sense,
according to the course of history. But there are others of a one-
sided character. One of these lies in the terms of redemption of
a loan. Some loans, ^,( 7 ., Consols, may be repaid by the Govern-
ment at par at any time (after 19*23) ; but the holders have no
right to claim redemption. This one-sidednoss tells, of course,
in favour of the Government, and has come about* because
Governments, being longer-lived, have taken more care about the
distant future than most individuals. But credit of this sort has
come into disfavour in the market, which now' prefers a bond
falling due on a fixed date. If the railway debt were to be paid
off, as suggested above, the most favourable terms the British
Government would be likely to claim '\oiild be those of “20-80
bonds ; i.e., bonds falling due in eighty years, but with the
option of redeeming after iw'eniy. If the bonds were issued at
about par this might possibly result in an imi>rovement in the
Government’s bargain after twenty years, but, of course, it could
make no immediate difference.

Another one-sided influence arises from the gradual gain in
security shown by foreign investnuuits. At present, the yield of
foreign bonds exceeds that of Englisli ones by an amount that is
not justified by the greater security of the latter it is partly a
matter of fashion and sentiment that keeps Consols at the un-
reasonably high quotation of' 4 or tlKU’eahouts.*^ With the gradual

^ Oukl^ Prices^ and Wages. (London, 3913.)

* Lehteldt, Journal of Statistical Society ^ January, 1913.

^ The greater marketability of Consols is one cause of their high price : but the
yield of the small issue of new per cent, .stock (rod. 1905) only exceeds that of

No. 91. — VOL. xxin n b

346

THE ECONOMIC JOURNAL

[sept.

disappearance of these non-economic influences it is to be expected
that foreign inv(‘stinents will rise in value, and home ones —
including railway ch‘))e]itures — will fall. Hence, even if there
were to be a gent?ral fall in the rate of interest, the consequent
rise in the juice of socuiities would be checked in the case of
those of ihe British Government, and it might not be able to take
advantage of its right of redemption.

So far as one can look into the future, there seems to be almost
nothing to (uicourage the view that railway nationalisation would
be a good bargain financially. By this I do not mean that a
w^ealthy and progressive nation like Phigland cannot nationalise
iis rail\Aa}s if it (tiooses, and make iluan succeed. .For tliere is
always ojie inflnenco in ihe })ackgrourid which, no doubt, is at the
bottom of ih(^ sanguine reformer’s mind : it is that the “market”
never fully discounts future progress. So long as Britain con-
tinues to grow in«po])ulation and prosperiiy, the general increase
in w’ealth will add to the value of railways, and m the long run
ihf^ purchas(*T, at any reasonable f)rice, wdli find th(un worth more
than he paid. Ihit the beli(‘vers in nationalisal ion are not content
with this far-distant prospfM*!.. ''riuy look for one of ihree things :
(a) a larg(‘ subsidy 1o th(‘ national rtweinie, as in Prussia, or (b)
cheajxu’ rat(*s than the com))a.nies oiftT, or (c) very favourable
terms of*(un]*]oym(‘nt for the rad way v/orkcu’s, and they look for
it to come soon, if not at on(-(\ d’Juie doi'S not seem to be the
slightest chance that their hope will he fulhilcd.

E. A. Lehfeldt

Johannesburg,

Aiyrll, 1913.

Statiatical Notc. -Tha staLisiics of English railways are notoriunsly luisatis-
factory, ospociaJJy as to tlie volume of goods traffic. The following figures are
simply takeu from tl»e olheial reports, without criticism : —

United Kingdom.

Gross

Passengers

Goods

recenpts.

(millions).

(million tons).

Expenses.

IHHO ..

oao

604

235

33-6

IKHh ...

oon

097

267

30-8

1890 ...

70 6

H18

303

'13-2

1896 .. .

930

334

47-9

1900 ...

98-9

1,142

425

61-7

1906 ... .

1061

1,199

461

700

1910 ... .

.. 111-2

1,307

514

760

Consols by 0 ly ]»pr cent., so although the Govornmont railway stock w'ould possess
the advantage of l)tMng th(‘ largest single issue in the world, it hardly seems likely
that lets than pei \\>Mild satisf}" hond-holders, io view ol the f.ujt that tlie

issne would treble tlu; amount t,l Ihitibh Govcrninent Slock on the iiiarket.

1913] FINANCE OF BAILWAY NATIONALISATION. 347

In index numbers (1895 taken as 100) : —

Gross

Receipts.

Passen-

gers.

Goods.

Total
traffic. ‘

Receipts
per unit of
traffic.

Ex-

penses.

Expenses
per unit of
traffic.

1880

113

102

1886

... 8'2

108

toi

1890

... 94

104

100

1895

. . 100

100

1900 :

121

123

127

12G

135

107

1906

... 129

129

138

135

140

108

1910 .

, . 140

141

154

150

•94

160

107

^ Weighting : Goods, two ; Passengers, one.

The columns of receipts and expeusos per unit of traftic show clearly that during
the period of falling prices roceijits fell while expenses remained stationary, and
during the period of rising prices receipts remained more nearly stationary, while
expenses, though somewliat ohockfd l»y the strenuous cflfirts of the 'companies, rose ;
further, tliat, as assumed iu the text, the variation in receipts is much greater than
that in expenses.

B B 2

PRICE VARIATIONS IN NEW ZEALAND.

Tuk purpose of these investigations is io asc^ertain the nature
and extent of price variations in New Z(‘aland, their connection
with similar variations in other countries, and their influence
u[K)n the eominereial and social life of tlu^ Dominion. The
method adopted is the well-known om' of the index-number ; the
base period is the decade 1890-1899, and its index-number is 100.
From fort,y to sixty commodities have been included- -new com-
modities [)eing added as reliable data become available. Raw
products stand to manufactured goods in the latio of 2:5, and
imf>orted goods to local products in the ratio of 8 : 5. The laclv
of trade jo\irnals makes impossible tlie inc lusion of such important
commodities as clothing.

dMie lollowing commodities have been includt'd

1. New Zealand Produriff.- Wheat, flour, odts, oatmeal,
barley, cbalT, f)otalo(‘s, hemp, wool (2), mutton, iamb, beef,
bacon, buttcu’, ('lu‘cst*, tallow, ]iid(‘s, limfx'r (8), sugar, soap,
bops.

JI. Imported (h)odf }. — Iron (2), beer, whisky, braiivly, port,
tea, coffee, cocoa, lead, zinc, steel, coal, fencing wii’c, ecu cut.,
white lead, red lead, currants, rice, sago, tapioca, sultanas, salt,
vinegar, salmon, kerosene, turpentine, castor oil, linseed oil,
matches, candk'S, tobacco, soda carbonate.

From 18(10 to 1908 the average annual price was obtained by
taking the arithmetic mean of four prices observed quarterly.
Since 1908 prices have been observed every three weelcs and the
arithmetic mean thereof calcuTated.

The following brief summary of the social and commercial
history of New Zealand should serve to make the appended tables
more intelligible.

I. — Histori\:al.

New Zealand lies at the antijiodes of the great commercial
nations of the world. In area it is but little inferior to the United
Kingdom; in population, however, it is surpassed by more than

SEPT., 1913] PKICE VARIATIONS IN NEW ZEALAND

349

one city in the FJmpire. In spite of its equable climate, its
natural fertility, and its varied resources, no strong tide of immi-
gration has ever set towards its shores. Though discovered as
early as 1642 by Tasman, and rediscovered in J7G9 by Cook, no
settlement took jdaco until the nineteenth century. It was not
till 1833 that a British Txesident was ap]X)inied, and not till 1810
that the British Flag was hoisted and the Maoris (natives) ceded
sovereignty to Britain. At that date there were in the Colony
not more than 100,000 ^Maoris and 2,000 whites. The two main
islands were not connected by cable till l«St)3, and it w^as not till
1876 that cable coninninication w'as obtained with lihigland.
Prior to that news arrived from Furope ten tunes a yt'ar, and was
at least four months old.

The growiJi oi the p()])uial ieii is exhibited in tiu' following
tables. Tiie Maoris, vvlio now minil)er about 15,000, are excluded
from all calculatioiib.

1810

2,000 or

■02 to t.ho sq. lull

1860

H0,()(.K) „

L870

2-18,000 „

1880

485,0(K) „

^ 0 „

1890

626,000 „

1900

7(>H,0(M) „

7*8

1912

. 1,010,000 „

10-0

There has been no great concentration of population in the
cities. Slightly more than half the [)o[)ulation is in urban areas;
the larg<‘,st city -- Auckland ' contains about 1 Of) ,000 ])eo})le, or
10 per cent, of the whole. There are three other cities not, much
smaller.

The climate is very mild ; snow is unknown oveu* 50 ])er cent:,
of the country. The soil yields ahuiulant crops of wheat, oats,
barley, and rye in the cooler parts, and of maize in the more
northerly. lloot-crops flourish everywhere, and the pasture
grasses of Britain grow ('qualiy well in the Dominion. Thus the
country is the ideal home of a farming community. The fon'st-
wealth, too, is considerable, hut, unfoi tunalely , fast diminishing,
though the State has recently inaugurated a laudabU* l)ut sc-arcely
generous scheme of afforestation. Timber is already imported in
large quantities ; our timber exfiorls consist only of fancy timbers,
or others peculiarly adapted for certain purposes. The sw^amps
produce large quantities of hemp (Phormium tenax) which
commands at times a read^ market. In the northern parts of
the Dominion large quant, ilies of gum have been dug from the
ground, the product of Kauri forests that disajipeared centuries
ago. The country contains a great variety of minerals ; but with
the exception of gold and coal these have been almost wdiolly

350

THE ECONOMIC JOUENAL

[sept.

Deglected. Of coal we produce many varieties, from the finest
steam coal to the poorest lignites. Though the production of gold
is steadily diminishing, it is probable that but for its former
presence in rich de]X)sits easily accessible the population of New
Zealand would not have been half what it is to-day. Large and
rich deposits of iron-ore occur, but owing to its refractory nature
and the insignificant population its successful treatment has not
yet been underiaken. Of much greater ])romise is the oil
industry : boring has revealed the ])rescnce of large oilfields, and
refineries are now being erected.

Th^^ following table shows the growth of our export trade
and its principal constituent items ; —

Exports.

I860 ...

. . 540,000 or

6‘9 per head.

1870

. ... 4,515,000 „

18-3

1880

.. .. 0,102,000 „

12-6

1890

.. 9,429,000 „

15*0

1900 .

18,055,000 „

17*0

1912 . . .

20,000,000 „

19*2

An export trade in 19U of 8,492 ,000 contained the
following*: - -

Wool ... .

0,492,000

Meat

3,505,000

Dairy produce ..

.. 2,770,000

Gold

1,815,000

Kauri ginn

896,000

Gram

830,000

In brief, 70 fier cent, of our exports are animal products

TI. -Pukes.

(Note . — To give more point to the tables, 1 have instituted a
comparison between prices in New Zealand and [irices in England
according to Sauerbeck. But as his numlxas are calculated on
a different basis, 1 have reduced them to the same base as mine.
Thus, Sauerbeck’s average annual index-number for my base
period (1890-1899) is 66. I have made this sixty-six 100, and
have reduced all his other index-numbers to percentages of this
100.)

1913] PEICE VABIATIONS IN NEW ZEALANB 351

Year. N.Z. England. Year. N.Z, England

1801 184 149 1887 103 103

1862 187 153 1888 103 106

1863 198 156 1889 Ill 109

1804 196 169 1890 107 109

1865 189 153 1891 108 109

18()6 200 155 1892 104 103

1807 187 162 1893 100 90

1868 184 150 JH94 98 96

1869 . . 164 149 1895 .... 93 94

1870 . .. 164 146 1896 . !)6 92

1871 . 160 162 1897 97 94

1872 .... 154 165 1898 97 94

1873 . ... J(U 168 1899 . ... 98 103

1874 161 156 1900 JOl 114

1875 148 146 1901 98 106

1876 140 144 1902 100 > 105

1877 .. . 144 112 1903 ... . 100 106

1878 135 132 1904 96 106

1879 . . 127 126 1905 99 109

1880 130 133 1906 101 116

1881 125 129 1907 .. . . 107 121

1882 ... . 123 i27 J908 . . 105 111

1883 .. 118 124 1909 . • . . L()3 112

1884 . 115 115 1910. ... 109 118

1885 Ill 109 1911 . . 112 121

1886 108 105 1912 .. 116 129

If we' ('liininate the a.brnpi flurlua.iions din' (o ('xe'opiional and
temporary causes, and avtn*agei the iiide'x-inimbers over ten-ye‘‘,ar
periods, we get the following results : —

Docado. JN.Z. England. Dccado. N.Z. England

1861-~]870 . ... 184 152 1883—1892 . 109 109

1862 - 1871 . 180 153 1884—1893 107 106

1863 -1872 J78 154 1885 -1894 . ... J05 105

1864 -1873 174 155 lRvS6— 1895 101 103

1865—1874 171 155 18H7-1896 .... 102 102

1866 -1875 . . 167 J54 1888-1897 ... . lo2 101

1867 1H7C . . leil 153 1889- J898 . ... 101 100

1868 -1877 156 152 3 890-1899 100 1 00

1869 1878 .... J51 150 1891 1900 . . 99 UX)

1870-1879 .. 148 148 1892 -1901 . . 98 99

1871 1880 . . , 145 J4G 1893- 1902 . . 98 99

1872-- 18S1 .... 143 144 1894- -1903 98 101

JK73- 1882 ... . J40 140 1895-1904 . 98 102

1874 HS,] . ... 135 136 1896 1905 . 98 104

1875— 1884 .. 130 132 1897—1906 . . 99 105

1876— 1885 127 128 1898-1907 ... 1 00 108

1877— 1886 . . 124 121 1899 1908 101 100

1878— 1887 . . .. 119 120 19(X)--1909 . . 101 111

1879— 1888 116 118 1901 -1910 . . 102 111

1880— 1889 115 116 1902-1911 . .. 303 112

1881— 1890 112 114 1903-1912 105 113

1882— 1891 Ill 112

From the foregoing tables it will be seen that a heavy and
almost continuous decline in prices occurrexl between 1865 and
1895. h'rom 1895 the 'movement has he^-eri, on the wliole,
upwards; very gradual and lu'silating at lirst, but rajiidly
accelerating in recent years. In both countries the decade of the

352

THE ECONOMIC JOUBNAL

[sept.

“’seventies” was one of somewhat violent fluctuations, but by
the end of that period the course of prices was indubitably down-
ward. During the “ ’eighties ” the English and New Zealand
tables show a remarkable coincidence, English prices falling
23 per cent, between 1880 and 1887, and New Zealand prices
22 per cent. Then followed two years of rising prices in both
countries; but this check was merely temporary, prices not
touching their lowest till 1895 or 1896. A period of comparatively
stable prices, with slightly upward tendency, then supervened.
During the South African War the level was abruptly raised, but
a renietion quickly sot in, though not for long. The rapidly
increasing output of gold and the expansion of credit had the
same effect in both hemispheres, but Sauerbeck’s figureg show
a much greater appreciation than mine. This discrepancy is
probably due in great measure to the inclusion by Sauerbeck of
a greater ratio of*raw materials, for in New Zealand, at least,
the most marked feature of the present decade has been the
remarkable rise in raw' materials.

Tabl* 111.

Year. Raw Materials. Manufactured Goods.

1890-1899 . 100 100

1905 109 94

1910 130 99

1911 180 103

1912 135 109

This table illustrates equally well the lapid rise now' taking
place in manufactured goods, due partly to a general depreciation
of money, partly to the rise in raw materials, and partly, maybe,
to a relative lack of progress in the invention of manufacturing
processes.

This relative increase in the cost of manufactured goods is of
great im])or1arice to New' Zealand since it foreshadow^s, other
things being equal, a gradual per capita decrease in our pur-
chasing power. For we are not a manufacturing nation. Such
manufacturing industries as we possess are endured and protected
only as infants that have a fair prospect of attaining an inde-
pendent maturity. Our industrial progress of the last ten years
is not encouraging. We lack the requisite labour — in quality no
less than in quantity ; and those huge aggregations of capital which
permit of cheapened production w'ill ne strangers to us for many
years to come. But with raw materials rising faster than manu-
factured goods; or, better still, wdth raw materials rising and
manufacturei goods falling, New Zealand’s purchasing power has

1913]

PRICE VARIATIONS IN NEW ZEALAND

353

tended to increase with every unit of increased production of raw
mdterials.

The following table shows how the prices of local and imported
goods varied ; the former being almost wholly raw materials, and
the latter exclusively manufactured goods. In parallel columns
T have appended index-numbers of the Bankruptc.y and Marriage,
rates, probably two fairly reliable indices of a. countiy’s com-
mercial stability and consequent social content nient. Though in
the compilation of the accompanying table no account has been
taken of such factors as the changes in production per head,
changes in the marriageable state of the population, (tc., yet it
presents two strongly iriarked features : the remarkable "decline
in onr prosperity when local com riiodj ties fell in a greater degret*.
than imported ^oods ; and secojully, the ecjually remarkable rise
in our purchasing power when local products rose relatively to
imported goods.

liOCftl

linpoHod

Dccado.

Goods.

Marriage.

Bankruptcy.

1870-1879

142

150

117

284

1871—1880

142

146

116

284

1872—1881

142

143

297

J873— 1882

. . 142

J39

116

312

1874—1883

139

134

115

333

1875-1884

134

129

113

338

1870—1885

129

126

110

342

1877— ] 886

120

123

107

IM7

1878—1887

121

119

105

336

1879—1888

116

102

323

1880 -1889

114

116

100

285

188i-1890

111

258

1882- -1891

. ... 109

111

231

1883-1892

107

JIO

206

1884 -1893

105

108

175

1885- 1891

103

106

167

1886—1895

102

104

154

1887—1896

101

103

137

1888—1897

101

102

122

1889—1898

101

1890—1899

100

1891—1900

100

102

1892-1901

100

105

1893—1902

lOi

108

1894—1903

103

111

1895—1904

105

114

1896-1905

J07

118

1897—1906

110

120

1898—1907

112

124

1899—1903

115

127

1900—1909

117

128

1901—1910

120

129

1902—1911

122

181

1903—1912

124

—

Thus we

may conclude :

first, that

variations

in the pric

level in New Zealand arc due only partially to causes purely local,
but since they coincide remarkably wdth variations in the price-

354

THE ECONOMIC JOURNAL

[sept., 1913

level of other countries, notably of England, Canada, and
U.S.A., they must be duo in great degree to causes of world-wide
operation ; and secondly, that while a period of falling prices of
goods of local production spells commercial instability and social
gloom, a long-continued period of rising prices of such products
means exceptional commercial stability and social enthusiasm,

J. W. McIlraith

Aunklfijid, N./y.

THE FEEDJNG^ AND MEDICAL TEEATMENT 0]^^
SCHOOE CHILDEEN.

The Education (Provision of Meals) Act of 1906 and the
Education ( Aclr»'‘'aistrative Provisions) At'i of 1907 allowed local
education authorities, under ca rtain circunisO‘uic(‘s to provide free
meals and free medical treatment for (denient-ary scdiool children.
Local ediK'iiiion oulhorities had some ])o\\ers with regard
medical tre<atirient before 1907. But thc'se two Ads may be
regarded as giving them the opportunity of undculaking two new
services which differed widedy from those wlu(‘h had up to that
time formed their main work. The most noticeable feature about
these Acits is that they enable an autljority, whieh is ^ot a Poor
Law autlioriiy, io administer relief in tlie shay>e of frpe meals
and free medical (n'atnu'nt, and to iiK'ot th(‘ cost of th(‘se services
out of the rates. In this respect, howenau*, these measures do
not stand alone. During the last ton years a number of Acts
have been passed, some of which remove the, administration of
existing forms of relief from the hands of the guardians and give,
it over to dilTerent executive bodies, while- others n^cognise new
forms of relief and set up new authorities to deal with the,m. Up
to tht^ year 1905 the guardians were rc'sponsihle for nearly all
relief. In that year the TTnemployed Workmen's Act set up a
new aiithonty which dealt with the ahl(‘-l)odicd imcun ployed and
gave it power to raise a rate. In addition to tlie two measures
wdth which this article is concerned, the Old Age Pensions Act
of 1908 and the Insurance Act of 1911 hav(' also been passed.
Ml these measures are closely relati'd. with the exception of tlie
Insurance Act, which stands somewhat apart : but owing to
certain features that it poss(‘,sses in common with the others,
mention may be made of ityiere.

The driving force whiclj has led to the ])assing of these Acts
has not been obedience to any theory, hut the desire to find a
remedy foi: certain definite evils. Public attention has been
directed to the problems of poverty during these last few years ;

356

1?HE ECONOMIC JOUENAL

[sept.

and from time to time some particular evil which is attributed to
poverty comes up for discussion. At one time it was the under-
feeding of school children that was brought into prominence by
the reports from the Jolianna Street School in South Tjondon,
at another time the inability of the poor to provide for therU'
selves in their old age. Any discussion convinces many peoph*
that something should be done injinediately. When the matter
comes to bo considered in Parliament it often appears that only
one method of treatment is available if any remedy is to bo
applied at once ; tliis remedy is the simple one of providing free
of cost that which is lacking— as, for exam})l(', meals and old
age iiensions in the two instances given above. In late years
Parliament has showm itself willing to adopt methods of this
kind, and when it does so, furtlur })rovides that these services
shall not be administered by the guardians, in order that those
who benefit need not be subjected to the odium which attaches
to relief so given.

There can be no doubt that pressure will be put upon Parlia-
ment to extend this form of relief. There is alr(‘.<idy a strong
movement in favour of the extension of the provision of meals and
medical treatment. It is the object of tins arficle to discuss
this method of relief outside tlie Poor Law, with particular
referende to these two cases. In the light of th(' experience that
we already possess it should be possible to form sr^mo 'Ldiiiite
opinion with regard io the suecess or otherwise of Iheso two Acis,
and of the desirability of extending their Rca)p(i. It will be
necessary in the first pla(u\ however, to skefch Uu^ provisions of
these Acts and tlu* manner in which they have wT>rk('d.

The provision of meals at the public expense' was precede, vi by
a period during which meals were provided by charitable agencies.
It w^oiild s('em that children w'ere first fed ou a large scale about
1875, wdien Mr. 0. IL Sims raised a fuiicl by means of tlic
Befercc new-spapcT. Other agencies sprang up iiol only in
London but also in the province.s. It w’as soon suggested tliat
feeding should he undertaken by the education authority, and
in 1899 the London School Board passed a resolution in favour
of this suggestion. In 1904 the question w^as again brought into
notice by the Johanna Street School inquiry, and in 1905 the
first step was taken to provide a remedy other than by means of
the ordinary Poor Law machinery ; this attempt took the shape
of the Belief (School Childrens) Oider of 1905. This Order
empowered the guardians to grant relief to the child of any able-
bodied man, without requiring him to enter the wwkhouse or

1913]

TBEATMENT OF SCHOOL CHILDREN

367

to perform the out-door labour test, upon application of the local
education authority or one of its officers. It applied, however,
only to children who were residing with their fathers, and
exempted those cliildrcn who were blind, deaf or dumb, or whose
father was for any reason absent. The Order was for all practical
purposes a dead letter.

The following year saw the passage into law of the Provision
of Meals Bill. It is an adoptive Act, and empowers a local
education authority to give meals to such children as “are unable
by reason of lac'k of food to take full advantage of the education
providrfl for them “ ; the cost must not exceed that sum which
can ]>(' raised hy a halfpenny rate. The cost of the meals iA to be
recovered from the ))arents as a civil debt, except in tliose cases
in whicli the lor-d education authority is satisfied “that the
parent is unable l)y reason of circumstances other than his own
default, to ])ay the amount”; in no case is the parent to be
disenfranchised

Sucii are the main provisions of the Act. The latest facts
with regal'd t.{) ils working are to he found in the Peport. for 1911
of the Chief Medical Officer of Health of tlie Board of Education.
The Act has fx'cn (uit in fo7'C('. by 110 local ediu^ation authorities,
or, in ctther words, hy rather more than a third of the whole
number. The total cost to the rates was slightly more than
<t:115,000, of wdiich about X'88,0(H) w'as spient in London. Th(^
total number of meals provided was over sixteen millions; the
number of children fed is not given for all districts.^ It is
interesting to note that the parents’ contributions, including the
money recovered summarily, only amount to XI ,507, while volun-
tary contributions only amount to X2,79G. The explanation of
this is, on the one hand, that practically no attempt has been
made to recover the cost, and, on the other, that voluntary
contributions cease wdien money is forthcoming from the rates.
There is another point of importance upon which the report
throws light. From the wording of the Act it would seem that
its authors intended that those childnui who were fed should be
selected by a physical test. It appears, how'ever, that as a
matter of facX in the large majority of cases it is the income of
the parent which is taken as a guide.

Turning now to the Act of 1907, there is little that is definite
to record as to the proviso for free medical treatment which
wxne made by charitable agencies before that date. To a certain

* Even where nuir' ers are given, they are not of much value. In London, for
example, a glas^ of milk taken when the child comes to achool and a two-courge
dinner in the middle of the day are counted alike as one meal.

358 THE ECONOMIC JOURNAL ‘ [SEPT.

extent such treatment was provided by hospitals ; agencies were
in existence which gave sj)ectacles fn^e of cost or at reduced
prices, invalid children were sent into the country, and so on.
I’he Act referred to above, while it imposed medical inspection
ujx)n local education authorities as a duly, merely empowered
them “to make such arrangements as may be sanctioned by the
Board of Education for attending to the health and physical
condition of children educated in public elementary schools.’’ It
permits them, in otlu'r words, to provide free medical treatment
in such forms as may be sanctioned by the Board. As in the case
of the ])rovision of meals, so also in this case, only a certain
nuudnu’ of authoriti('s have availed thems(^lv(^s of these powers.
In those instances in which this has been done, not only does
the extent to which medical tnuitinent has been undertaken vary
from plac('. to place, but so also does the extent to which it is
frije. The (diiid* Mculical Officer enumerates five principal ways
in whi(*h actifjn has been taken : (1) Employment of school
nurses, (‘d) Trovision of s[)ee,tacles. (3) Treatment of ringworm.
(4) Pontrihution to hospitals. (5) Estahlishment of dental climes.
There do not s(‘em to be any figures available to show the cost
of th(*se undertakings throughout l^bigland.

We have sk('t(;h(Hl v(iry briiTy the jK)wers given to local
authorities under tlie.se Acts, and th(‘ extent to which they have
b(HUi ns('d. Both iiu\asures are clearly tentative and expeuB
mental, method at prc'sent in use is bail-way bid '(‘cn that

of a deti'rrent Boor Law and of what we may call free universal
faovision For, on the one hand, there is no trace of deterrence
or of “l('ss eligible “ (‘onditions ; whil(‘, on Hit' ot her band, the
relief is limited to those childnm whose parents cannot p'w for
what is ])rovidc(l.

We have described the object of this article as an attempt to
discover whether relief outside the Boor Law is ever justified,
and, if so, whether it is justified in these two eases. Up to the
present the word relief has been used in so vague a sense that it
might cover the free provision of .anything that w^as either
necessary or dc'.sirable. We must try to define the ti^rrn before
proce('ding further. Belief, as used in w’hat follows,, does not
mean any form of free provision, but only such forms as have
been instituted with the. object of benefiting a class of people so
poor that they are unable to live to a minimum standard of
comfort. Biiblic highways, parks and libraries are, for example,
excluded ; for they do not owe their existence primarily to a
desire to benefit the poorest classes, but to the fact that the

19113]

TREATMENT OP SCHOOL CHILDREN

359

VThole eonirij unity needs them, and that a system of free provision
is the best metluyd of obtaining them. We exclude, in short,
those forms of free provision which we (*an vvtdl imagine that
any community would set up even tliough it had no problem of
povert,y such as we have.

The Poor Law, the oldest and until lately the only source of
relief, was originally due to a general conviction that no member
of the community slioiild be allowed to starve. The Poor Law,
in fact, recognised a minimum standard bedow which no one
should fall. This minimum standard is now known as the
“poverty line.” No two peo}>le, it is tni(\ agree as to where
the line should be drawn: but it is gmerally admitted . that,
however low it is ]>laced, a eonsidcratih' section of the comnuinity
fail to reach it. at the Pool* ! aw sc't out- in cdrect to do,

and still does, is simply to malo' up the deticieiiey in tlu' inecune
of those who fall maikcally heLu the standard,. Tin* deheiency
is ma(lc‘- uj) eithe r dnec'ily in monew, or })y mc^ans of the ]>ro-
vision of som(‘ service which can [)(‘ as a rule easily (‘alcidated in
terms of momw. dliosi' who were respvinsihh' for the institution
of tlic^ l.*oor Law nt‘vc‘r n'garded it as a [lermaiumtly satislactor}
solution o{ (h(‘^ pi'ohh'io of poverlv ; tht'V loihcsl to social r(‘-
adjustnuuits which shoiihl place eveuwone in a position some day
in the future to do without its assistance'. ]n the meantime thci
ndief was unfort unaiedy a necessary c'xpc'dient.

Experience of thc^ working of the iinrc’forined Poor Law
taught one a very important lesson; it showed that a» system of
redief without any trace c)f deterrence or “Ic^ss cdigible” conditions
tends inc'vitahly to hc'comci a. permanent featurci in the orgaiiisadion
of socdel v. E\)r oiicu' a certain class comes to depend upon relief
for Some) nc‘c,essity of life',, evorytliing becomes adjusted to a
condition of things in which that service', forms an imjiortant
part. It was a realisation of this facttlial led to tlie introduction
of “less eligible^ ” conditions into the Poor Law; this feature of
the Poor Law is not due', then'fore*, to the fact that those wdio
apply are in any way culpable; it is due to the (conviction that
the', solution oi the problem of [KiveTty iff to lie sought in social
re-adjustirieuit, and not in methods which provide directly that
which is lacking.

This conce]>tion of the function of relief held good for many
years. Hecenily, however, t^ere has been, as we have seen, a
tendency to favour the*, adynnistratiem of certain forms of relie'f
outside the Poor Law' without any trace? of dtjterrence, and this
can only mean that opinion has changed as to the [lossihility of

360

THE ECONOMIC JOUENAL

[sept.

relief ever forming a permanently satisfactory solution of any
aspect of poverty. For it must bo obvious to those who support
such measures that, once they have been established, it is most
unlikely that they will ever be repealed. It would be very difficult
to repeal, for example, such a measure as the Old Age Pensions
Act wdien a whole generation had bee%encouraged to calculate
upon a definite pension at a certain age.

It is now possible to pul more clearly the }X)inls that we must
answer. We want to know whether there are any forms of
relief that can be administered without deterrence as free national
services w’hich wo should be williiig to see as })ermanent features
of society. We must be certain that Ibere is as little objection
to them as there is to the free y>rovision of public parks and
libraries. Further, we wish lobe able to distinguish those aspects
of |X)verty which can be dealt wilh in this manner from those
which cannot ; for it is obvious that the whole problem cannot be
solved in so simple a manner.

If we consider the system of national education, we may
obtain some answer to these questions. In this case something is
provided without any trace of “less eligible*’ conditions, which is
not only desirable, but, according to modern ideas, absolutely
necessary. The system was further made free because a kirge
number of jiarents could not pay for the education of their
children. There are three }K)ints in connection with the ]TOvision
of education which deserve attention. In the first place, \/hen
education w^as made free it was a new need, and not sometliing
which naturally came within the calculation of cveiw parent as a
necessity that he ought himself to provide for his children. The
service* nnd(‘rtaken has not been so much wantexl by those wh‘>
benefit, as thought desirable for them by the more fortunate
classes, who have', experienced its advantages, because they have
been able to ]>r()vido it for themselves. Secondly, if education is
provid('d fnx*, the form which it takes need not dnler m any
important feature from that which it would assume if it were
left to private enterprise ; and therefore the existence of tHis
service does not, because it is fn'c, cause any change in the
routine of family life or any shifting in the outlook of those who
benefit. In other words, all the chief features of “going to
school ” ar(' the same whether the school Iiappens to be a national
or a private school. Thus the system does not break into that
traditional idea of legitimate independence and freedom in private
matters tliat is upheld by nearly everyone, whatever their political
opinions may be. Lastly, it tends rather to place a new responsi-

1913]

TBBATMBNT OF SCHOOL CHILDBEN

361

bility upon parents than to weaken the sense of duty towards
children. Moreover, the question of cost should not be forgotten :
expenditure upon education is in the nature of an investment ;
expenditure upon many forms of relief, as, for instance, upon
the relief of able-bodied paupers, is not.

Experience has thus shown that relief outside Poor Law has
been applied with success to meet this need. There is no con-
troversy upon this point; no one thinks that j)arents are “pau-
perised because their children go to the national schools. Let
us turn now to the two special cases of the need of medical
treatment and meals for school children. We may consider the
former first. It is not true to say that the need is as novel as
was that of education when it was lirst introduced. But it is
largely in the natuio of a novelty to the poorest class of parent.
This may be doubted by many people ; hut those who do so will be
foupd to be without any but a superficial accjuainkincc with the
f»oorer classes. It is scarcely going too far to say that the poorest
classes of all merely realise that, when a child is so ill that it
cannot get out of bed, something must he done. ^Fhcy have no
idea of the preventive side of medical treatment, of the detection
of symptoms, of the rules of health. Knowledge on these subjects
improves as we go up the social scale, but it is lamentably
deficient even among classes well above the })overty line. • Medical
treatment, therefore, using the word in an extended sense, is
largely a new need. But it is something more than that. The
need for education, once it is recognised, is a normal and regular
need. The need for medical treatment, however, is neither
regular nor normal. Disease in any form is abnormal, and falls
with the most irregular incidence upon different families. Even
if it came into the minds of an ordinary parent to make provision
against disease it would be quite impossible for him to calculate
what be should lay aside.

As regards the administration of the service, it need not in
any essential feature differ from private treatment. In fact,
“going to the doctor” does not assume any peculiar character
which affects the whole outlook of those concerned because the
treatment is free. If the children arc treated at all, whether they
go to a private doctor or to one in the public service makes no
difference to the routine of daily life. The system neither forces
parents to do something wh?f;h they resent as an intrusion upon
their private concerns, nor does it tend to make them less re-
sourceful or independent than before. On the contrary, those
who have had practical experience of the working of the Act of
No. 91. —VOL. XXIII. c c

362

THE ECONOMIC JOURNAL

[sept.

1907, for the most part agree that it has done much to increase
the sense of parental responsibility. Parents who never before
troubled about matters which seemed to them minor ailments,
but which often are of great importance to the growing child, are
now anxious to detect symptoms of disease in their earlier stages.
As to the matter of cost, it is obvious that money spent in this
direction is more certainly in the nature of an investment than
money spent upon education ; for though we may be convinced
that some form of education is desirable, we cannot be certain of
the value of any one particular system. Rut we c.an have no doubt
that good health in the coming generation will be of the greatest
importance to the community. Further, the cost of medical
treatment will without doubt diminish very considerably, and in
this respect it differs fundamentally from most proposals of this
nature which invite us as a rule to embark upon a course, the
annual experkse of which seems likely to increase indefinitely.

Let us sum up the case of the need for medical treatment.
We start with the fact that a large number of parents cannot
pay for such treatment as is desirable. There are two courses
open ; we may ho])e that such social readjustments as we can make
will in time enable this section of the community to earn higher
wages and provide what is lacking for themselves; or we can set
up a national service whereby this need is directly supplied in
kind. j3efore we can approve of this alternative we must con-
vince ourselves that such a system would form a jjermaneutly
satisfactory feature in social organisation ; in other words, we
must inquire what the influence of the system upon character
would be, and whether it is coin))atible w itli such a life of freedom
and independeruo as we desire to see made ])ossil)le for everyone.
Now, the method of social adjustment is slow and uncertain in
its working, the benefit to be achieved by a jirovision of the need
great and immediate. Thus, if after a critical examination of
the case w^e come to the conclusion that neither cost, influence
upon character, or anything else stands in Jie w^ay, we can
advocate its adoption, and can disregard all objections on the
grounds that everything is done for people from the cradle to
the grave, because, if such criticdsiri has any meaning, it is that
character is weakened, and we have inquired as to whether this is
so or not.

Whether such a service should 'be free to all, as education is
free, or limited to those whose incomes are less than a certain
amount, would require too much space to discuss here. It depends
upon the degree to which medical treatment is a new need to

1913]

TREATMENT OF SCHOOL CHILDREN

363

classes above the poverty line. There would seem to be no
jiisti>i cation in limiting it to strictly necessitous cases as is done
now. Probably the most satisfactory course would be to make it
free to all children attending elementary schools.

We now come to the far more difficult question of the free
provision of meals to underfed children. Tt is also a question of
greater urgimcy because it affords a good electioneering cry, and
])ressure to extend the provision of meals will be greater and come
sooner than |)ressurc to extend the system of medical treatment.
The \ery fact that it does form a good electioneering cry shows
that \v(? are not dealing with a new ne(‘d. The necessity for
providing meals for his children must come within the -view^ of
every parent. It is so obvious th.‘it (his is the case that we need
not dwell upon it It is clear tlia( ndief of this kind must pro-
foundly elfcet the outlook of those who benefit, for it is impc >sible
to see how it, can be given with.out interfering, with the ordinary
routine of life in sucdi a manner as to discourage independence
and enter[>rise. No ()arents wdll tak(‘ the same view of their
responsibility wlien their children have been fed at the public
ex[)ense. h'or it must be remembered that we have reason to
believe that if such relief was offered to all elementary school
children it would become permanent ; in other words, the life of
the poorer classes would be so ordered that in the piatter of
children’s iiu'als they would be entirely dependent upon relief.
And it s(*ems certain that, taking human nature as we know it,
and remembering the traditional ideas among which everyone is
brought up, character would deteriorate and the average level of
all these (|ua lilies which make a man more or less valuable would
be lowered.

Those who have had practical experience of the working of
tlui two Acts notice a remarkable difference as regards the influ-
ence which they exert. The provision of medical treatment
encourages the better class of parent and brings out the more
desirable qualities. The provision of meals, on the other hand,
has precisely the opposite result ; there is a strong temptation for
parents to l)e untruthful and to make out their means as less
than they are. So difficult is it to discover the truth in the
diflci'cnt c;iS(‘s wlucli come up for treatment that upon the whole
the good parent is |:>enalised and the untruthful f>arent profits.

We have to remember, :fov\ever, tliat in addition to merely
fulfilling a need of the mpmeui, money spent in this way is an
investment. It is recognised fairly widely that the provision of
meals may be made an opportunity for education in the sense that

c 0 9

364 THE ECONOMIC JOUENAL [SEPT.

•f

good manners and the proper use of knives and forks may be
taught. But those who are acquainted with the lives of the poor
will lay more stress upon another aspect. What, above all things,
is lacking in poor homes is regularity, order and discipline ; in
good homes regular and orderly meals are one of the chief influ-
ences in training a child in these duties. In bad homes meals
are taken anyhow and at any time. In this sense the provision
of meals is a valuable influence in a child’s life ; it is an invest-
ment in so far as the ideal of what the standard of life should be
will have much to do with the kind of home which the child will
in time (o come form for himself.

Thv.B far it w(Hild appear that this particular need is not one
that can l)e suitably treated outside the Poor Law; this fact,
however, seems particularly regrettable in as much as such a free
service does more than satisfy a present need, since it forms a
valuable moral training. This is the place where we may with
advantage take note of a most unfortunate confusion w^hich has
now been introduced into the whole question. Formerly the
Board of Education issued a separate report upon the working of
this Act. For the last few years the report has been included in
that of the C’hief Medical Officer of Health, and it is clearly the
intention of the Board to consider the provision of meals as i)art
of the njedical work of local education authorities. What they
appear to say is this : an under-nourished child presents a case
for medical treatment, and the medical officei shoLud be able to
send the child to the school dinners. But surtly under-nourish-
ment is not a medical matter at all when it is due to lack of
food ; when due to inability to assimilate food , then it may 'well
be so, and the doctor should have power to order special food to
meet the particular circumstances of the case. If these two
cases are confused, the result is the vital difference as regards
influence upon character between the provision of a new want
and of a natural necessity is lost sight of ; and the provision of
medical treatment will bring in its train the evils that follow the
provision of free relief outside the Poor Law for needs that are
not suited for such treatment.

What, therefore, is to be done to meet this case? Is the
proper course to leave the treatment in the hands of the Poor
Law authorities as the discussion indicates? The objection to
this course is that it does not meet the case at all. The parents
do not go of their own accord to th^ Poor Law at the present
time, and it is impossible to force them to do sa To leave this
matter to the Poor Law is equivalent to giving up all hope of
finding a solution of the problem through any form of relief.

1913] TREATMENT OF SCHOOL CHILDREN '"^65

There is one aspect of the case which has not yet been men-
tiontd, and which suggests a partial solution of the difficulty.
Whenever relief is given to children the parents are relieved to
the extent of the cost of the service provided. But although both
parents and children benefit, it is the former alone with regard to
whom there is ever any reason to fear that deinoi-alisation will
result. If there is any injurious influence upon tlie children, it
will be indirect and due to the character of the parents. To see
that this is the case, we have only to consider what “ fiauperisa-
tion ” presupposes. It is to a large extent synonymous with a
weakening of the sense of responsibility, with a loss of initiative
and ente'.rprise ; and no one can, therefore, be “[lauperiscd unless
he has already a knowledge of the conditions of life, of a struggle
to earn a living, ‘'Oj so on. Of all this the school child of fourteen
or under l as no real understanding, and he (*an have none until
he has been launched, as it were, into a wider life (Vitside school.

If this is true, then one half of the difBculty is removed. We
need not fear that the system will ha'^e any directly injurious
influence u|X)n the character of the children. It suggests that
since the need is pressing, and its fulfilment is also in the naiure
of an investment, the parents might be disregarded in the most
urgent cases. Supposing that the system was confined to these
cases, who would the parents he? They would he •found to
consist of one of three classes : either the casual labour class, or
of the class which has been brought, into distress by some unavoid-
able circumstance, or of the hopedessly degraded class. Now it
should be noticed that something is being dope for both the
former classes at the present time ; and we may look forward to
seeing before very long a distinct iniproveiiKuit with regard to
casual labour, unemployment, and unavoidable distress. There
is, therefore, reason to hope that the worst cases among these
(dasses will disappear; as to the last class there is, unfortunately,
no further degradation to fear. The suggestion is, theiefore,
that we might in certain selected cases tak(* the risk of the evils
which, as we have seen, follow a system of fre(', provision of meals
jn consideration of the good which it undoubtedly does.

The one necessary factor is that the system must not be
administered so as to become permanent.^ To ensure that tlie

^ If, for example, it should be foiyd that the Kyatom had any inflnouco npon
wages*, it would be a sign that it had been extended too far. Statements have been
made from time to time to the effect that parents have accepted lower wages
because meals arc provided for their children. The present writer has met with no
such case himself; further, he has asked many members of “Care Committees"
and others engaged in the administration of the Act if they have over come across
such cases ; be has, however, never heard of a single example, as a result of these
inquiries.

366 THE ECONOMIC .lOITRNAli [SEPT., 1913

system shall not become permanent it must be strictly limited to
the most pressing cases ; and further", it should be understood by
those who administer t he system that it is of a temporary nature.
It will be evident that the system suggested is not unlike that
which is actually in force at present. The Act is differently
administered in the various districts ; but u])on tlie whole it is
rather more widely extended than is here suggested as advisable.
It is no doubt a dangerous exfieriment ; it is by no means certain
that it will be possible to withstand the pressure to extend it, and
any further extension will almost certainly make it a |:>ermanent
institution.

A. M. Carr-Saunders

SOME FACTORS AFFFXTING THE INCIDENCE OF
THE NATIONAL INSURANCE (CONTRIBUTIONS.

Thk contributions of workers iind eraployers towards the
National Insurance Funds may be borne by the contributors, or
they may be sjnJ'ted. In this article no attempt is made to
determine their final incidence ; but one or two salient factors in
the problem are selected and considered. (The normal contri-
butions only are taken into account.)

I — IVorkcrs* Confrihutiom.

The workers’ contributions are, in the first instance, a deduc-
tion from w^'lges. Will the worker continue to bear th(' burden?
To-day we can make no such ^^eneral statement as that*“a direct
tax upon the wages of labour can have no other effect than to
raise them somewhat higher than the tax.” ^ The hypothesis of
bare subsistence wages, upon which this conclusion rests, is no
longer tenable ; and other conditions have changed. But it might
seem that the growth of trade unionism which exists as an active
force for raising wages, would give support to Smith’s solution.
There is reason, however, to doubt this.

Trade unions may influence wages directly and indirectly ;
(a) They may force up wages in their own groups, and this
may have the secondary result of raising the wages of labour in
general. We may neglect this second influence. Professor
Marshall, for example, finds that “the power of trade unions to
raise general wages by direct means is never great.” ^ With
regard to the first f)oint, the importance of the influence of unions
on the wages of their own groups will depend on ihe extent to
which the trade union mover^ent covers the industrial field.

Now, the total number of workers compulsorily insured against
sickness is thirteen <o fomdeen millions; whereas the total mem-

^ Adam Smith : “ Wealth of Nations, Bk. V., Part TV., Art. III.

3 “ Economics of Industry ” (Third Edition), p. 392,

368 THE BCONOMId JOURNAL [SEPT.

bership of trade unions in the United Kingdom is now estimated
dt jtist three millions.

Again, the total number of employees compulsorily insured
against unemployment is some two and a half millions ; and of
these, only about seven hundred thousand are members of trade
unions.

Table L

{Compiled from the Fifteenth Abstract of Labour Statistics: Detailed Tables.)

Trade Group.

Number of
Employers aflected
by the Insorance 1
Act, 1‘ari 11. !

Number of such Eni])loyee«
who are litembers of Trades
Unions.

Building.

Ordinary artisans

Labourers

1,248,000

60.000

166,903

12,217

Engineering and Shipbuilding.

Ordinary omployoeR

(a) Enginooring and Ironfounding

{h) Shipbuilding ...

Labourers

777.000 \

137.000 /
60,000

896,147 1
21,846 2

Mill-sawyers ,

43,000

6,679

Coach-builders .. j

116,000

Construction \
of Works j
Municipal \

Employ ooR j

11,786
18,240 »

97,907 ‘

Total

2,421,000 i

1 719,676

^Includes 12,000 “National Sailors and Firemen,” and 7,000 “Marine
Engineers.”

‘‘^Includes 10,017 “National Amal. Union of Labourers,” 6,016 “Workers’
Union.”

® These are “Dock, wharf, riverside and general workers.”

* Inohides all kinds of municipal employees.

As (o the distribution of the unions, it is still true that, in
spite of the recent growth of the movement among unskilled
workers, the most poorly paid are the least organised.

Hence, so far as the direct influence of trade unions is con-
cerned, that influence touches only a small section of the insured
workers (less than one-fifth of the whole class of wage-earners,
and less than oiu^-third of the wage-earners insured against unem-
ployment), and these arc already tlA^ more highly remunerated.
For the majority of the workers, therefore, there is little reason
to expect that trade unions will be able to cause the burden to be
shifted from workers to employers.

1913]

NATIONAL INSURANCE CONTRIBUTIONS

369

II. — The Employers* ConirihutionH, ^

The contributions of the employer towards sickness insnrance
are a tax upon production. How heavy is this tax? Here we
wish to determine three relations : —

(a) The relation of the tax to the vaku' of the output in
certain groups of industries ;

{h) The relation of the tax lo the wagcs-bill ; and
(c) The relation of the tax to profits.

'Jdiese relations established w('. shall b(‘ in a fK)siti()n to under-
stand the iin[)ortance of the tax.

With this in view, we note that the (unployers contributions
for sickness insurance are propoiihmed , not to value of output,
profit, or capital, l)iit to the nuiiiber of eni])loyees, of either sex,
between the ages of sixteen and sixty-iive (except those who earn,
other than by inanuai labour, TKU) a yeai* and upwards). ]n
each trade the (unployer pa}s, in respecti of evcTy such employee,
the sum of threepence per week.

Now it. may be that in time a part or the whole of the workers'
contributions may in some cases be shifted forward to the employ('r
in the shape of higher wages. When this takes place the. tax on
the employer will be increased by an fjmount not exceeding four-
pence, and the employer will then bo paying, in resf)e(*tf of every
employee, the sum of seven pence )>er week. Hence, in tht'.
following calculations, we give two sets of results ; the first based
on the assumption that the employer pays only his own contribu-
tion ; the second on the assumption that he ]>ays both his own
and his ejnployees' contributions.

(a) The first point, then, is the relation of the tax to the
value of the output. This w-e shall calculate, first for industry
generally; second, for separate*, groups of industries, as given in
the re]X)rt of the (V*nsas of Production; and tliird, for certain
sulidivisions of industries within groups.^

The Census provides the following figures : ^

Value of gross output of Census Industries in the United Kingdom ~ £1,705,366,000
Deduct — Cost of Materials ™ £1,028,346,000

Cost of Work given out -- 24,885,000

1,053,231,000

Net Output £712,135,000

^ The Census Report arrives at “Net output” by deducting from the value of
the “ gross output,” (a) the cost of#materialB used and {b) the cost of work given out
to be done by other firms.

* Report of First Census of Production, p. 19. The industries invostigated
directly for the census include factories, workshops, mines, quarries, building trades,

370

ECONOMIC JOURNAL X^EFT*.

In the Censilfi of Production trades, the total numb^ of wage-
earners (male and female, under and over eighteen years of age,
and including outworkers) was 6,595,276.^ This figure we may
take as practically equivalent to the number of insured workers
wuthin those industries. Salaried persons are excluded, and some
of these might be insured ; but against that we have included
wage-earners under sixteen years of age, who are not insured.

It has been estimated that on the average six \veeks per
annum per wage-earner are lost through unemployment, sick-
ness, &c. But that period may not be made up of complete
weeks, and tlierefore may not affect the payment of contribu-
tions. ‘For this reason, and because we would err by making
the tax api^ear larger rather than smaller than it really is, we
shall assume that the contributions are paid for fifty-two weeks
in the year. Hence for sickness insurance the contribution of
the em[)loyers’alone is equal to --

l)d. X 52 per em])loyee per annum :
or F‘4,287,000 for the 0,595,276 employees.

Similarly, for sickness insurance, the contributions of em-
ployers and em[)loyees together amount to 1 10,003 ,000. Com-
paring this with value of net output we find that-"

J. Employers’ fiirkness rontributionK equal 0*6 per cent, of value of net output.

2, Employorb’ and workers’ sickness

contributions ,, 1*4 ,, ,, ,,

Next, the total number of persons engaged in agriculture ir> tbo United

Kingdom in 1908 was ... 2,824,000 ’^

Of those, some are not insurable, viz. : —

Occupiers of holdings in Groat Britain . ... 600,000

Farmers and farmers’ sons in Ireland 677,000

l,077,vK)0

Insurable agricultural workers 1,747,000

]<\)r the same year the net (njt[>iii of agriculture was

i:210,0()0,()()0.^

Hence,

1. Employers’ sickness contributions equal 0*6 per cent, of net output.

2. Emi)loyor.s’ and workers’ sickness

contributions „ 1*2 ,, „ ,,

works of construction. Excluded are per^iis working on their own account,
occupiers of domestic workshops, and certain specified trades. The report inoorpor*
ates the results of special investigations into agrieviture and fisheries.

^ Oensus of Production, p. 12.

^ Correct to the nearest thousand.

•'* “Census of Production,” p. 12.

* Ibid. p. 24,

National insueakcb coNTBiBultoNs

371

m3]'.

Lastly/ Fisheries employed 107,000 persons.’

Value of net output of fisheries was £12,000,000."
Hence,

1. Employers’ sickness contributions equal 0*6 per cent of not output.

2. Employers’ and workers’ sickness

contributions ,, 1*3 ,, ,, ,,

Suiiiining tlio foregoing resiillK, we find -

Etnploters' Sickness

Enijtloyprs’ and Workeis'
Cioutnbutioiih as per-
centage of Net Output.

Group of Industries.

Contributions us per-
cenlaj^e of Net Output.

The Census Industries ..

0'6 per cent.

1 *4 per, cent.

Agriculture

i 0*5

i 1-2

Fisheries ...

or,

1 13 „

Census Industries, Af^riculturo, and

Fisheries i 0 6 per cent.

^ I 3 per cent.

But this average may give a "false impression- Since the tax
is proportioned to number of employees, the actual weight of

Table II.

Col. 1.

Col. 11.

Col. TTI.

Col. IV-

Col.

Group of Industries.

Gross

Output

Net

Output.

Number

A. 1

' i

(Tn

£n()0'B,)

(In

jCeoO’s.)

Wage

earnerK.-*

Textile Trades

333,561

94,334

1,210,777

I'er

cent.

0*2

Per

cent.

0*8

Per

cent.

0*6

Per

cent.

Building and Contracting

116,692

60,466

674,679

214,764

0-3

0*7

0-8

1*7

Timber Trades

46,390

21,444

0*3

0*6

0*7

1*4

Iron, Steel, and Ship-
building

376,196

163,082

1,432,489

0*2

0*6

1*4

Leather, Canvas, and
India-rubber

34,928

8,618

119,631

76,666

0*1

0 0

0-3

MiucL and Quarries

148,026

947,178

0-4

()*6

0-9

1 1*2

Clothing Trades

107,983

47,673

756,882

287,222

0*5

1 1 *2

Paper, Printing, &o.

61,308

33,660

0*3

0*6

0*7

1*2

Metal, other than Iron
and Steel

93,466

11,893

101,687

0*07

0-3

0-16 ; 0-7

Food, Drink, and To-
bacco

287,446

89,614

400,617

0 09

0*3

0*2

0*7

Chemical and Allied
Trades

75.032

I 21,667

110,107

0 08

: 0*3

0*2

0*7

(Col. IV. — A = Employers* sickness contributions as a percentage of
,, B— ,, ,, ^ ». M

Col. V. — A = Employers’ and workers’ sickness

contributions ,, ,,

B=:

“ Gross Output.”
Net Output.”

Gross Output.”
“ Not Output.”)

* “Census of Production,” p. 12. ^ P*

First Census of Production, U.K. (1907) p. 21. ^ Ibid. p. 12.

372

THE ECONOMIC JOURNAL

[sept.

the tax will vary ibr different industries according to the relative
importance of manual work in the process of production. Tn
industries in which the number of w^age-earners engaged is high
(•om})ared with value of output, the weight of the tax wull be
relatively great, and vice luirsa. We have, therefore, wwked
out similar percentages for the different groups of industries
euibra(*.('(l uiuku’ tlie Census of Production, and the results are
given in 'I’able Tl. (p. 371).

Th(^ g»'ou})s of industries in the above table are arranged
according to the size of the percentage of combined contributions
of workers and em|)lovers to value of net ouiput; and the table
shows that even where that )>ercentage is greatest, it does not
rise io 2 per cent. ]n the case where it is least it falls to 0*7
f)er cent. As would be ex])ccted, in such trades as the chemical,
and those dealing largely in precious metals, the percentage of
contributions to gross output is very low^ ; the net output is small
compared with the gross, and the difference between the per-
centage (d' cont ributions to gross and net. output is very great. On
the other hand, where cost of raw* material is small, or absent, as
in quarrying, tiiuber trades, itc., the difference between gross and
net output and therefore between the percentages, is slight.

Lastly, to particularise even more fully, find similar figures
for individual industries within certain groups. Here we select,
two groups, one wdiich stands high in the foregoing table, and
one which stands at the bottom ; and in these wc (ihoose at
random one or two industries as given in the delailcjd tables of
the (kuisus of Production.

Under the grouj) called “Mines and Quarries’' wv. find : —

Table JII.

Trade

Grogs

N«‘<

Wage-

Employers'
conlril»ut)on ns a
}U‘rcentage of

! Employers’ and
workers’ contribi^
tions as percentase of

outiiul.

oiiipnt.

earners.

Gross

output.

Net

output.

Grogs

output.

Net

OUt})Ut.

Coal Milling .

Salt Mining

Slato Quarriep

ilOOO’s

122.631

667

1 1,148

£fKKVi..

106,090
! 3)9

1,044

824,822

4,433

14,042

Per cent.
0-4

0-4

0-8

Per cent.
0-5

0*9

0-8

Per -ent.
10

1-0

1-8

Per cent.

Similarly, under the group called “^Metal Trades other than
Iron and Steel,” we find : —

1913] NATIONAL INSURANCE CONTRIBUTIONS

373

table IV.

Trade.

Grose

Outpui

Net

Output.

Wage-

earners.

Enipl(*yer8’
contribution as a
percentage of

Employers’ and
workers’ contribu-
tions as percentage of

Gross

output.

Net

output.

Gloss 1
output.

Net

output.

£(X)0’s.

£000*8

Per cent.

Plate and Jewellery

8,559

3,599

33,119

0-2

0-5

1-3

Gold and Silver Re-

fining

51,22G

1 431

1,879

0 002

0*2

0 005 1

0-6

Reviewing the results so far obtained, we find that, whether
w^e take industry as a whole, or look at separate groups, or at
individual types of industry within groups, the joint contributions
of employers and workers for sicknt^ss insurance never rist‘ 'ibuve
52 per cent, of tlie value of tlie net output ; and that , jn an extreme
case, like that of gold and silver relining, they fall as low^ as 0*1)
per cent. If, on the other hand, wo compare contributions with
gross output, we find that the percentage falls, in the case of gold
and silver refining, as low as O’OOd per cent.

To understand how slight is this burden due to the insurance
contributions, let us assume that the wdiole of it could be shifted
by producers on to the prices of produce, and coini)ar 0 the conse-
quent addition with the actual variations in prices of goods which
take place from year to year. One or tw^o examples will suffice.
(1) First, taking the w^hole of industry, the proportion of workers’
and employers’ joint contributions to value of nei output ^ in all
the Census industries (including agriculture and fisluTies) is, as
we have seen, 1*3 per cent. Hence, if the tax wcur' shifted on
to prices, prices would be raised by 1*3 per cent, dins figure is
only slightly greater than the average annual increase in the prices
of wholesale articles from 1901 to 1911 (viz., 1*52 per cent.), as
shown by the Board of Trade Index Numbers.^’ (52) Secondly,
in the single industry of coal mining, a similar calculation shows
that the addition of the whole of the insurance tax to prices
W'Ould mean an increase on the price of coal at tlie pit-mouth of
10 per cent.® ; whereas the annual variations in price due to utlier
causes are greater than this in nearly every case.^ (3) Lastly, the
^ard of Trade index numbers for the changes in the wholesale
prices of the raw material of the textile trades since 1900, show

^ ^ At the place of production.

* Fifteenth Abstract of Labour StativStics, p. 138.

» Sec Table III.

* Fifteenth Abstract of Labour Statistics, p. 139.

374

THE ECONOMIC JOURNAL

[sept.

an average annual increase of 2*6 per cent. Now an addition of
2‘6 per cent, to the value, in 1907, of the raw materials of the
textile trades is equal to 6*4 per cent, of the net value of
the output of those trades for that year, whereas the whole of
the insurance tax is equal to only 1*9 per cent.^ of the value of the
net output.

Such calculations show that the amount which would be
added to ]>rice if the whole of the insurance tax were shifted
forward to the consumers is small compared w^th the actual
variations in wholesale prices from year to year.‘^

(b) Let us now pass on to consider the relation of the insur-
ance contributions to wages. In the absence of the final report
of the recent inquiry into earnings of labour, it is almost useless
to attempt any com])arison of the insuraiujc contributions with
wages in general. But if we take the results as published, we
find that the average earnings for men (over twenty years of
age) engaged in textile and clothing industries, in building trades,
in public utility services, in metal, engineering, and shipbuild-
ing, and in railways, were, for 190G~7, *60s. 9d. per week. For
these trades, and on these figures, the employers’ sickness con-
tributions is 0’8 per cent, of wages, and the joint sickness contri-
butions of worker and employer is 1*9 per cent, of w^ages.

C'Oming to smaller groups we are able to shovv within wdiat
limits the tax falls in different industricjs. The Tle]:)orts of the
Board of Trade Enquiry into Earnings in the United Kingdom,
so far as published in the Fifteenth Abstract of Tjabour Statistics,
show that the average weekly earnings of all workpeople (includ-
ing those who w^orked less or more than full time) were lowest,
for J90()“7, in the dress, millinery, <fec. (workshop) industrv’ and
highest in iron and steel manufacture (iron puddling, steel
making, rolling, forging, &c.). Hence we get the following
maximum and minimum results : —

1 See Table 11.

It may bo objected that the above reasoning is valid only when goods pass
through the hands of only one manufacturer in the course of their production ; that
inrhere they pass through many hands the tax may be passed on at each stage ; and
that this cumulative process may result in a quite serious enhancement of price
to the ultimate consumer. The objection is relevant. But the rate of accumula-
tion IS not constant ; and prices of final products often remain level in spite of
remarkable fluctuations in coat of raw materials. No general conclusion can be
drawn as to the importance of this cumulati\e process. ^

1913]

NATIONAL INSURANCE CONTRIBUTIONS

375

Table V.

Trade. i

Average weekly
earnings.

Employers’ sickness
contributions as percentage
of earnings.

[ Workers’ and oioployers’ joint
contributions as percentage
of earnings.

«. d.

Per cent.

Dressmaking .

2‘2

6-2

Iron and Steel

33 02

0-7

1-7

^ PMfteonth Abstract of Labour Statistics of the U. K., p. 113.
® Ibid, p. 91.

The above percentages give the outside' limits. In industries
in which the workers are chiefly adult men, the percentage will
approximate to the low(‘r limit; in those which e.iiploy a large*
proportion of youths and women, it will apjux)a(di the higher.

(c) lidat'ion c; insurance ribuiiinis to Profits of Industry.
— Possibly most light would be thrown on this question of tin*
weight of the iusurance tax if we could ascertain *its j)ro})ortion
to the profits oi industry; hut it is just here that the necessary
statistics are not available. To determine that pro[)ortion one
would require to know, for the same industry or group of indus-
tries, (1) the number of wage-earners employed, and (2) the
[irofits. Public companies, of course, publish their accounts and
balaiK'e sheets, but rarely if (wer make any nderenc^.- to the
number of wage-earneis they employ. We have bdt‘n abh^,
liowever, by indirect methods to get an approximation to these
figures in one or two cases, Honu* of the instances to be (pioti'd
are not quite recent, and at the date of their ri'fxirts the Jnsurance
Act was not in force. ]3ut taking their tigures it can be deter-
mined to what extent [uofils may be reduced by the insurance
tax .

Example 1.

ddie first example is that of a Scottish coal mining company,
wdiich tells ns, in a prosjiectus dated 1902, that its output of coal
amounted to 4,150,000 tons. Now', from the Census of Produc-
tion Report* we can find the total outfiut of coal for Scotland in
1907 and the number of cmjiloyees. From these data U'c can
reach a rough estimate of the number of wage-earners in the
colliery under consideration, and this number we put down as
1,L,000. The profits of this^ company, according to the same
prospectus were, in 1901 , i-287,110. Hence, in such a case.

Employer’s Sickness contribution would be 31 per cent, of prolits.

Workerb’ and P^mpL yers’ Sickness contributions would be 7 4 ,, ,,

Pp, 66, 67.

376

THE ECONOMIC JOURNAL

[sept.

Example 11.

The second example is that of a railway company, which, in
its report for the latter half of 1912, states that, for tha-t half-
year, the expenditure on —

Healtli Insurance was £9,912 8 3, and on

Unemployment Insurance was 1,815 9 10

As the payment of insurance contributions did not begin till
July 15th, 1912, this sum does not represent the contributions
for a full half-year, but the same report estimated that a total
expenditure of £25,000 a year could be expected. We may
therefore estimate that for the full half-year the total contribu-
tions would have been —

For Sickness Insurance

,, Unemployinent Insurance

.. £10, 750 \
... £1,750/

Total ... £12,500

In the same company the net balance available for dividend, after
deducting from receipts the total expenditure on revenue account,
providing for all fixed charges and setting aside the necessary
sum for special renewals, was £1,058,980. Hence we find that —

Employers’ Health contributions rtr 1*0 per cent, of profits

,, Unemployment contributions = 0*1 ,, ,,

Example 111.

Lastly, we take the case of a company of sbipbuildcro, ship-
repairers, and marine engineers. Tn this cose the only relevant
data given us in the prospectus are the total wage bill for sixteen
years, viz., £5,260,889; and the average profits, for sixteen
years, left after providing all working expenses (including
directors’ fees and income tax, but excluding interest on borrowed
money and depreciation), viz., £97,223. Now. from the reports
of the Earnings and Hours of Labour Enquiry, we know that in
the ship and boat-building industry the average earnings of all
workpeople in the United Kingdom (including those who worked
less or more than full time) was 28.9. lid. per week in 1906.
From the total earnings of the workers in this comf)aiiy, and the
average earnings of workers in this industry, we can form a rough
estimate of the nimiber of workers employed by this company.
The number works out at approximately 4,400. Hence —

Employers’ Sickness Insurance contributions - 2*9 per rent of profits

Workers’ and Employers’ Sickness contributions — 6* 8 ,, ,,

The following table sums up these results and adds other
figures : —

1913]

NATIONAL INSURANCE CONTRIBUTIONS

377

Table VI.

—

Railway Co.

Coa. Mining Co.

Shipbuildn g Co.

Production (amount)

4,150,000 tons.

58,783 tons.

Receipts, total

£3,537,297 (ball yr.)

Profits —

(a) Total

£1,058,986

£224,000

£97,223

(&) Per ton

J/-

£1 13

Employers’ sickness contri-
bution s---

(a) Percentage of receipts ..

0 3 per cent.

—

(ft) ,, ,, profit

Joint sickness contributions

1*0

3-1 per cent.

2-1) j)er cent.

as percentage of profits , , .

—

7‘4

0-8 „

The foregoing are the results obtained from a consideration of
the contributio.ii^ for sickness insurance only. In industries
which con -6 under tlie un''mployment soctio.ii of the Insurance
Act, the burdens are. of course, heavier. By using the He])ort
of the Census of I’roduction it is possible to make similar calcula-
tions for industries which closely correp])ond to thost' taxed for
unemployment insurance. The following tabh's summarise' the
results thus obtained : —

Table VII. — Showing Relation of Contributions to Value ok Nei’ Output,

Industry.

Value of

Number of
Wage-
earners.

All coutnbu-
tioiis as per-

HickiiesH con
Inbulions as

Unemployment

contributions

net output.

cell luge of
net output.

peioentage of
net output.

as percentage of
net output.

Clay, Slope, Build-
ing and Contract-

£000's.

Per cent.

Pci cel l

Per cent.

ing ^

Iron and Steel, En-
gineering and

60,466

674,579

2 9

1-7

1*2

Shipbuilding ...

Railway Carriage

153,082

1,432,489

2-4

1-4

1*0

and Wagon Trades^

3,562

27,105

1-9

^ Census of Production Report, p. 743.
2 Ibid. p. 93. * Ibid. p. 220.

No. 91.— VOL. XXIII.

D D

378

THE ECONOMIC JOUENAL

[sept., 1913

Tab^ VIII. — Showing Relation between. Contributions and Wages.

Industry.

Average

weekly

Employers' contributions as
rercentage of wages.

Joint workers’ and
employers’ contri-
butions for sickness

wapte,

190<j I

> Sickness

(

Unemploy-

ment.

Totfl.

and unemployment
as percentage of
wapes.

Sawinilling and Machine
Joinery

«. d. i

22 7

^ Per cent,

1*1

Per cent.

0*9

' Per cent.

2 0

Per cent.

4*4

Engineering and Boiler-
making

27 3 !

0*9

0*7

1*6

3*7

Ship and Boat Building
and Repairing

28 11

0*8

0*7

1*6

3*1

Building

28 C

0-8

0-7

I'G

3*5

^ Fifteenth Abstract of Labour Statistics, pp. 87, 88.

James Gunnison

REVIEWS

Railroads: Rales and Regulations. By William Z. ^Ripley,
IHi.D., Nathaniel Roj)eH BrolVssor of Rconornies in Harvard
University. U/jngmans. 19Rh Up. xviii + 059. Price 14^.)

By tliis hook and its two companion volumes, Railway
Rrohlvms, Sclceiions <nul Doruments in Economics, which
appeared two years ago, and Railroad Finance and Organisation,
announced to a[)pt‘ar directly, but sections of which have already
been published in advance in The Uaihvay Age Ouzel tc and
elsewhere, Professor bij)ley has put economists all over the world
■--but more espectially in Fiiigland, where there is no railway
literature worth mentioning- under a deej) obligation. In the
English language, at any rate, there exists no such ' complete
pn*sentation of the whole subject from the pen of so competent
an author, ddie fullness of detail and wealth of illustration is
such that an economic student desiring to obtain a thorough
understandiiig of the railway ])roblem as a whole — though not,
of (‘ourse, that of any country other than the United States in
partltailar - will in future be able to hnd all he needs in IVofessor
Biphiy's vvoik, and need hardly seek the fountains for himself.

My attitudt‘- towards the ])rescnt book as a whole is one of
unfeigned admiration. Having tried something in a much smaller
w^ay on the same subject myself, J know how difficult the book
must have been to wTite : and ] can a])])reciate the skill with
whicli the task has been accomplished. There is only one serious
criticism, and that Ih'ofessor Ripley aluiost disarms by the frank-
ness of his [*refac(' : “If bias there bo, it will in all likelihood be
found to favor the W(^lfare of the ‘dim inarticulate multitude.’

. . ,11 there be lack of judfcial fK>ise in this regard, it is, at
all events, palliated l)y free confession in advance.” In my
opinion there is “bias” and “lack of judicial jioise,” due, as it
seern,^ to me, not merely to sympathy with the “dim inarticulate
multitude,” but to the fact that lYofessor Ripley has in his

■ 1 ) D

380

THE ECONOMIC JOURNAL

[sept.

study of the subject been in contact with, and therefore uncon-
sciously imbibed the ideas and the mental attitude of the regu-
lators, State Governors, State Commissioners, and Interstate
Commissioners, rather than of the regujatees, the railway com-
panies. No one who has watched from the outside the long
process of development which the regulation of railways by public
authorities has gone through in the United States, can reason-
ably doubt that, w^hile the public authorities have usually —
though most eriiphatically not always, by any means — been
actuated by the best and most honest intentions, they have again
and again forced u))on the railway companies a jxdicy contrary
to the public interest. And yet in no instance that I have noticed
has Professor Pipley openly expressed disapproval of their action.
I’he prohibition of ]>ooling by the Act to Kegiilate Commerce of
1887 almost of necessity thrust the railw^ay companies back into
th(^ slough of. secM'et rebates and unreasonable discriminations,
frotn which the better managed lines, at least, were doing their
utmost to escape. Professor Ripley (chronicles, but does not
condemn. The railway companies, struggling to get away from
a vi(‘ions system, complained for years that the Interstate (Com-
merce Onnmission failed to use such powers as it ()ossessed —
and tluw were not inconsiderable - to assist them. Professor
Rif)U^y is silent on this point. The decisions of the Buju'eme
('oiirt ill the ^Frans-Missouri and Freight Traffic Ass(u*if‘tioii
cases, whicffi d(M;ided that the Bherman Anti-Trus^ Law applitid
to railroad compani(*s-— in spite of I he admit lf‘d fact that Congress
had not intended it should so a{)ply — were mainly ]‘es 2 )onsible
for the weltc^r of rebates which discredited railway management
in the (dosing years of the nineteenth century. Yet Professor
Kiph-y, who does not liesitate to criticise judges quite freely whcm
tlu^y may hapf)en to cnirb the ambition of his hero, the Inter-
State Commerce (.'Ommission, has in this case not a word of
disapprobation, or even of regret, to offer. Nor does he so much
as mention the name of Mr. (-assatt, then ^^resident of the
Pennsylvania Railroad, the one man who did more probably
than any dozen public functionaries to put an end to secret
rebates.

In some cases lYofessor Ripley’s unconscious bias against the
railway coni])anies leads him to ^ignore the facts of his own
^evidence. A good instance is to be found in the chapter on the
Movement of Ratc^-s since 1870. On p. 425 he says : ‘*The curve
of revenue per ton mile, as shown by diagram at the head of
this chapter, certainly gives no indication of the considerable

913] RIPLEY: RAILROADS, RATES AND REGULATIONS 381

increase of freight rates which has ensued since 1900. . . .
Although the curve does not show it, there has been a notable
upward movement all along the line.” On p. 427 ho speaks of
“the substantial increase of rates which has taken place during
the decade,” which was, he says, “more often accomplished
surreptitiously.” After discussing for three pages <his substantial
increase, which he takes for granted, though ho admits that tlK'.
curve does not sliow it, ho adds that “it must sufiice that the
fact of a substantial rise of charges sijice the turning point in
1900 is beyond (luestion. On the other hand, it is indubitable
that such increases have occurred, arousing vehement - protests
among shippers, and have been more widely advertised than
change in the pposite direction. Substantial redudions.
especially on low-grade stapk's, have sometimes occurred, aiul
one is almost at a Joss how io strike a fair halancr hetwern lltr
I wo tn the absence of dependable data.'' [noviower’s italics.]
Is it unreasonahlc to sup}>ose that th('. curve does strike a fair
balance, and that the sum of the decreases roughly equalled the
sum of the increases? Professor liipley evidently does not think
so; or, if the phrase may bo permitted, does not “feel that way,”
for, on p. d30, he goes on to consider “How far the rise since
1900 has been commensurate with the genc'ral u])ward tuovernont
of prices of other c.ornmodities than transporiaiion. . . . The
oviden(,*e tends to show that prices in general have* moved upward
during the last ten years by approximately one-fourth, and it may
he even one-third. Have railway charges in general surpassed
this rate or not?” But enough on this point. For economists
possessing no personal faiiiiliarily with the subject it is, J think,
a. serious blot on a work in other respects of Ihe very highest
value. On the other hard, there is a (‘ompensating advantage.
The book will of necessity be read by eveuw railwayman who
desires to understand his owm subject, and it will he profitable for
him to see how the action of the railway (*.ompauies appears to
an outside student, whose intention to be fair is as unquestionable
as his competence.

In so large a book, recording such a vast number of separate
facts, there are bound to be mistakes. Here arc two statements
that look as if they cannot boiih be right : On the opening of the
first Trans-Continental route in 1869, so it is stated on p, 19, “a*
large volume of trade was at once deflectcMl from the sea-route
round Cape Horn. The value of goods shipped by water between
New York and San Francisco, which in 1869 amounted to
$70,000,000, fell in the next year to $18,600,000, and in 1872

3iB2 THB>ECONOMIC JOUBNAL *' [SEPT.

to less than $10,000,000.** Then, on p. 28, ‘‘It was estimated that
as late as 1878 not over one-fourth of the total tonrage moved
into California went by rail.’* Is it possible that the value of the
one-fourth was so very much greater than the value of the three-
fourths as to ex])lain the enormous drop in the value of the ocean-
borne traffic?

Statements as to the amount of assistance given to the rail-
ways of the Tnited States from public sources are often made,
l)ut they are seldom conclusive. Professor Kipley says on p. 89,
“J^eliable evidence tends to show that the State and National
Governments, u|) to 1871), had pledged themselves ont' way or
another for a sum equivah'nt to one-tifth of the cost of construc-
tion of the 47,000 miles of line then in the United States. And
approximately another fifth, at the very least, must have been
contributed from -local and municipal sources.” ft would he
interesting to know wdiat projiortion the two-fifths of the capital
as it existed in 1870 bears to the total railway capital of 19f3;
and, further, to know wdiat has h(>eii the ultimate fate of the
public investments. Certainly the UedcTal (fov(‘rnment did well
out of its advance to the Union and C!(‘ntral I'acific TIailroads;
and more than one of the Southern Staff's nets a handsome,
income nowadays as a raihvay shareholder.

On p. 90 we read that “the London and Norih-Westirn, one
of the leading railroads in Great Britain, rejMjrts rc'f <uitly an
average freight load of only 68 tons.” Alas ! the North- West eru
not only do(\s not report, but does not even know its average
train load. We only wish it did.

On p. 105 Professor Eiidey states in a very jjonveniont form
the general law applying both to cost, and to ratf'S : “The
common rule is that the rate rises as the s<|uare root of I lie dis-
tance, rather tha.n in jiroportion to it. A hundred-mile haul
represents a cost approximately only twice as gre^at as one of
twenty-five miles, instead of being four times as much. Por
thrice a given cost the haul may be increased nine times.” It
probably should be added, so far as rate and m^t cost is in
question, that the rule hardly applies to higli-class traffic. It
may not cost more than three times as much to move a ton of
furniture 270 miles as to move it ^0 miles ; but it is very ques-
tionable wdiether any railway company would be content with
making a charge only three times as^ much on an article that
could well bear a higher rate.

Is it correct to write, as Professor Ripley does on p. 114, that
“railway competition is of three entirely distinct sorts : com-

1913] BIPtBY: RAILBOADS, BATES ASD REGULATIONS 383

petition of routes, competition in facilities, and competition of
markets Surely competition in facilities is a sub-head of
competition of routes, having alongside it a second Rul)-hea(l,
competition of rates. Further, competition of markets is two-
fold according to whether we regard the market as a place of
import, or as a place of export. Is not the true formula bouk'-
thing like this? “Railroads compete, or may com})ete, directly
with each other in rates and facilities for tlu carnage of trafiic
for which two or more routes are available. Further, 'they
comjiete indirectly with each other, acting in this case, however,
not so much on their own account as in the capacity of agents
for, and supporters of their customers, larmers, meichanta, or
manufacturers: ^'n the one hand, to bring in, from djlfereni
producing districts over different rout(‘s, agricultural [iroducts and
raw' materials into the great central }K)int^,. wdu're th(‘.s(' goods
are either consuncHl or bulla'd or transfonned for further desjiatch
to points beyond ; or, on the other hand, to enal)l(‘ different con-
centration points to distribute over different routes goods for use
ill the same consuming area.’* It may he added that tlu' same
thing IS true of jiassenger traffic. The Great Northern and the
North-Western compote directly for [lassenger traffic between
London and Edinburgh : and it matters nothing to ihe hotel-
keepers at the two ends of the journey which route llu‘ [lassengers
take. On the other hand, the (treat Western si^viee to Gorrmall
competes indirectly with Ihe North-Western service* to North
Wales, and it matters very considerably to the hotel-kt‘ej)ers oi
the respective districts how^ far either eompaiiy can make its
competition eft'ective. In other words, then* is upon each
company an economic compulsion to do what, in American
railway phraseology, is termed sometimes “]uot(‘eting its own
territory,” and sometimes “keeping everyone in business.”

I’rofessor Uipiey opens up a wide fi(*ld tor divscussion m the
following statement : —

“Hpcicial rates which create new business should be care-
fully distinguished from special rates winch merely wrest busi-
ness from other carriers or markets. Any expedient which will
make two blades of grass grow where one grew before ; which
puts American wheat ipto Liverpool in competition with
India and Argentina ; which cheaj>ens California fruit on the
eastern markets ; which offers a wider choice of building stone
for Chicago ; which will establish new industries for the
utilization of local raw materials, deserves the greatest
encouragement. Our country has been unprecedently
develojxid in consequence of the energy and progressive-

384

THB ECONOMIC JOURNAL

[sept.

ness of railway managers. But thousands of other special
rates have no such justification, even w^here they ^ are public
and open to all shippers alike. These are the expression
of railway ambition to build up trade by invading territory
naturally tributary io other railways or traders.”

Is there really any such antithesis as Professor Kipley suggests?
Is it not a cas(‘ of the old definition of orthodoxy and heterodoxy?
Can we doubt that the jiroprietors of quarries near Chicago con-
sider Chicago territory naturally tributary to them? Can we
suppose that flu^y r(‘gard rates which ‘‘ojffer a wider choice of
building slone ” as “deserving the greatest encouragement”?
Surely no one can lay down a formula, which shall cover all the
millions of cases in practical life, to decide when competition is
fair or unfair. We may agree that, just as the fanner wdio, by
better methods or harder work, makes two blades grow w^here
one grew before, is*a public benefactor, so the railw^ay manager
who, by m()r(‘. economical utilisation of his plant and organisa-
tion can afford to, and consequently does, carry his traffic at
lower rates, must on balance be rendering a ))iiblic service. But
the fanner o])(‘ratcs on so small a s(*-ale that the injury which
he causes to his neighbours is as negligible as the effect of a load
of refuse dumped into New York Bay in eroding the coast of
Ireland. 4 great railway company operates on so vast a scale,
that its rate-adjustments may effect the economic develofmcmt.
of half a continent.

That this strong statement is none too strong wdll be admitted
by anyone who studies Professor Kiplcy’s account of the develop-
ment of what are known as the “inter-mountain ” rates, on which
a ca,se is now pending before the Supreme Court, whose decif-’»on,
though it cannot be final in anything more than a judicial scuise,
wull doubtless have very far-reaching consequences. Hero is,
roughly, in outline the situation as it has giowm up since the
Trans-Continciilal railways first came into competition for
traffic from the .Atlantic to the Pacific coast wdih (lie water route
vid Cape Horn. First, New York, let us say, obtained an excep-
tionally low through railway rate to San PYancisco to compete
with the water route. Then Buffalo and Pittsburg claimed that,
unless they were given the benefit of this same rate, they would
send their goods by rail to New York and thence by sea. The
claim was conceded. The same demand was next made by
Chicago and St. Louis, with the same result. Theoretically, no
doubt, it might have paid these tw’o cities to send their traffic
1,000 miles to the east by rail and then by sea, rather than use
the all-land route of 2,300 miles at the local rate. Anyw^ay, the

1913] RIPLEY: RAILROADS, RATES AND REGULATIONS

385

claim was conceded. But this was not the end. The growing
Missouri towns, Omaha and Kansas City, asserted, no doubt with
entire truth, that they could do no trade with California if they
had to pay the local rates, while the whole eastern United States
had the benefit of a low through rate. And fhe railway com-
panies serving them naturally insisted on their right to “protect
their territory.’' So once more the area from which the through
rate applied was extended further lo the west. And the result
is that to-day the whole territory of the United States, stretching
for more than 2,000 miles from }V)stoii to i)(mver, has the right
to the same tlirough rate to San Francisco. And this, be it
observed, by the extension to the nearest, [)laces of the Iionefii,
already granted to Oie most distant.

But this is noi. the whoh^ story. through rate b(‘gan as

an inter-ocean rate, and points in California and Nt'vada, east o{
San Francisco, wrrv back from the ocean. Shippers, therefore,
at one such {X)int A were, and still are, called uf)on to pay for
goods to another such point B the through rate*, from A to San
Francisco, pins the local rate*, back again t.o B. In other words, a
merchant in Boston can send a car-load of goods 3,500 mihis
through Denver and Reno to San Francisco for considerably less
money than would be charged for a car-load oi t he sanu^ goods from
Denver to Beno, say 1,000 miles. Stated baldly, this n'S'ilt looks
like grotesquely gratuitous injustice. And yet each step of the
process by which it lias been brought about might wcdl be jnsi ifiod
al the time. And the commercial situation in the Avholo of lh<'-
Far West has growm up under, and lias a<iapted itself io if.

The matter has been before the Interslale Commerce Com-
mission in various cases extending over many years. Jn Mh'
decision now before the Sujireine Court for n^view, the Commis-
sion has, after exhaustive discussion, jiut forward a. solution
which is at least ingenious. Broadly, it is this : Westward of a
line drawm norili and south through St. T\aul and Omaha I’ates
io intermediate points must not be liiglier (lian to ihe‘- Pacific
coast, heroin territory lying eastward of tliis line, but- w'cst- of a
line drawn north and south tliroiigh Chicago, raters to thf int(u-
mediate points may be higher by im amount not exceeding 7 per
cent. From a third zone betw^een Chicago and Buffalo the excess
may be as ranch as 15 per cent. And finally, from the nearer
neighbourhood of the Atlantic coast itself the excess may reach
25 per cent. Probably th# suggested way out of a situation that
cannot be defended as permanently reasonable is, provided the
process of rearrangement is sufficiently gradual, as good as could

386

THE ECONOMIC JOURNAL

[sept.

be found. But it is more than possible that the whole thing
will be upset by the Supreme Court. For it is claimed by the
railway companies, and apparently with good reason, that the
Commission has gone beyond its legal powers. Its power, they
say, is to prescribe reasonable maximum rates, but not to prevent
the railroad companies going below these rates, or to lay down
a general framework of relation of rates inter se.

Of the innumerable points which J had marked for citation
and discussion J will give just one more. It has a twofold interest
both in itself, and because it illustrates Professor Kipley’s instinc-
tive attitude towards railway companies. One of the latest
amendlnents to the Act to Begulate Commerce made by Congress
in 1910 is to the following effect : —

Whenever a carrier by railroad shall in com})etition with
a water route -reduce the rates on the carriage of any species
of freight to or from coinjietitive points, it shall not be per-
mitted to increase such rates unless afteu' bearing by the Inter-
state (Vunmon’e (commission it slial) be found that such
proposed incr(‘ase r(‘sts uf>on changinl conditions other than
the elimination of water comjianies.**

Now, in my judgment this is a quite proper provision, and,
indeed, it so happens that the Peport of the recent Vice- Bengal
(Vimmissaon on Irish Ihiihvays contains a recommendation that
the same restriction should he put u[)on our laihvays at home,
for which I was specially rc'sponsihle. But Professor Pipley
makes this comment: “The following account by VV. M.
Acvvort.li in the llaihray Age Gazetir of a conversation with the
late Collis V. Huntingdon illustrates the possible abuse “ The
story, which is too loug to quote here, may be summarised thus :
The Southern Pacific Bailroad ran two fine steamers between
Han Francisco and Sacramento. A compel itor started a service
by an inferior steamer at half rates. ThereujKm the Southern
Pacific laid iq) the big boats, and ran a cheap steamer at rates
cut in half agaiii, till they forced the outsider out of business,
and bought up his steamer at their owm price. Now this story, be
it observed, does not illustrate the abuse. The action of the
Southern Pacific (k)inpany was taken, not as a carrier by rail-
road, but as a carrier by water, a^d would not, therefore, have
been contrary to the section as printed above. Further, it is
surely at least arguable that water competition, even in the hands
of a railroad company, is on a different footing from competition
by rail. The service, for instance, between Dublin and Holyhead
is cartied ojx by the North-Western Kail way in competition with

1913]

SBLIGMAN : ESSAYS IN TAXATION

387

a private urdertaking, the City of Dublin Steam Packet
Company. It seems a hard saying that, if the Dublin Company
were to start a rate war, the North-Western would be morally,
and ought to be legally, bound merely to act on the defensive,
and reduce its rates pari passu ; and would be doing something
reprehensible if it carried the war into the enemy’s country.

I have expressed disagreement with Jhofessor Pipley on a
good many points, so let me conclude by thanking him- and J
am quite sure no economist who reads the book will disagree
with me — for one of the most. valuabU* books thal. has been
written on the subject in any language.

W. Ivf. ArwoKTH

Essays in Taxalion. Py R. A. Srli<;m\n, M^'Vic'kar

Professor of Politi(‘al Economy, (olumbia rhhv(Tsity.
Eighth edition Completely revised and enfaiged. (MaC'
millan & Co. 1913. Pp. 707.)

The works of American Professors of l^’conoTnics seem to be
almost entirely free from what, justly or imjiistly, are called ihe
academic failings. Certainly this is true of Professor Seligmau.
No one could accuse him of a craven reluetanf'c to express opinions,
or^of any sort of pedantry. It does not matter bow complex and
intricate are any set of circumstances he is investigating, and
how difficult and probIciTiatical any ('a.l(*ulation with respect to
thorn must be ; he never shrinks from summing up his reasoning
in one of those brief, decisive judgments for whicdi readers ar^^
always exceedingly grateful, lie spares no ])ains to ascertain first
all the available facts : he is conscientiousness itself in his careful
and elaborate study of anything that might throw light on a
problem ; but, when he has done all that he can do along these
lines, lie takes his cliancc of being wrong, and unhesitatingly
states bis general opinion. Nor does be allow himsedf to be
hampered by an excessive obedience to the claims of orderly
method. lie passes rapidly from history to [)ure theory, and
from pure theory to practical considerations, whenever it suits
the purpose of the argument he has in hand ; and, though this
method may be only possible in a book of cssfiys such as this is, it
is difficult to see how otherwise it would have been possible to
present in such a brief and well-proportioned way the main
features of so many complicated matters.

It would be too miilh to say that he makes them all inter-
esting. The General Property Tax in the United States, its
history and administrative defects, the taxation of^Ccjfpqi’ations,

388

THE ECONOMIC JOURNAL

[sept.

niid the multitudinous problems connected therewith, are jungles
which not even Professor Seliginan’s powers of compression and
synthesis would make it worth' while for English readers to
traverse. They must simply rest in the assurance which the rest
of the voluiTU‘. gives them, ihat, should they at any time be com-
pelled to iuvestigate. such problems, they will find here a most
helpful and trustwortliy guide. The discussion of exclusively
American questions occupied the greater part of the volume in the
earlier editions. But Professor Seligman has now incorporated a
gi;eat iiiunher of addresses and articles which deal for the most
part with matters of general interest ; and as these additions have',
n^sulted “in a volume of almost double the size of the original/’
they hav('. altered fundamentally the scope of the book’s appeal.
In its enlarged form it- should obtain a greatly increased number
of readers on tliis side of the Atlantic.

l^rofessor Belig’man has brought up to date his survey of recent
reforms with a particularly interesting chapter on tlje changes of
10()9”10 in Britain, Germany, and Australia. He shows that
there are eertaiii important tendencies common to them all. He
lays stn'ss upon four ]K)inls : (H the develojunent iu all these
(‘rumtries of ineome and inheritance taxes, with llu' arloption of
the principles of jirogression and ditTerentiation ; (2) the develop
nient of l^nd values taxation ; (It) the importance of the part still
f)layed by indirect tax(\s ; (4) the growing need o\ a satis'*aclory
adjustmtmt of tlie relations between central and ioeal finance. He
is especially emphatic on the third of tliese ])o]nls. He not un-
justily eonipiains that most theories of taxation take little or no
ae(a)unt of indirect taxes in their criteria of justicaa Befined
discussions of equity }>rocced as though such taxes did not ^xist.
It seems to be assumed tliot indirect taxation is undesirable and
unfair, and, further, a form of taxation destined rapidly to dwindle
and disappear. Profc'ssor Seligman shows Jiow erroneous is this
latter notion. Indirect taxes are bearing as large a share as ever
of the burden of revenue-raising. It has bc'.en the proposals for
direcd. taxation in tlie recent Budgets that have created the most
clatter : but the increases in indirect iaxaiior have been just as
substantial. And so, “to say, as did a well-known writer some
years ago, that all indirect taxation is crooked taxation, is seriously
to impeach the entire modern development.’’ This Professor
Seligman is most unwilling to do. He is, above all things, a
believer in modern development : and Jie accc^rdingly demands
some more satisfactory theory of equity to explain and justify the
policy of indirect taxation.

1913]

SELIGMAN : ESSAYS it TAXATION

389

His own attempt at supplying the deficiency is a very un-
succe^*«ful one. He starts by making the amazing assertion that
hitherto, or until very recent times, no one had realised that
there was a prol)lem of the incidence of taxation. The fact that
a tax may be shifted from the shoulders of him on whom it is
placed he regards as an essentially modern notion. His own
solution of the problem of incidence seems to be what he terms
“the absorption theory.” A tax after it has been once perma-
nently established becomes “absorbed ” by reason of “the doctrine
of capitalisation.” In other words — words, wo think, not of recent
origin —an old tax is no tax. How far Ih’oft'ssor Seligman
imagines the indirect taxes of a modern community are actually
thus absorbed is not (piite clear. But, he seems to argue that, even
when th(} taxes n>:‘ not “absorbed,” th(w are, at any rate,
“diffused.” Their incidence is difticuli to tra(*(\ d'hey may be a
burden on somebody, but upon nliom it is impossibjt* precisely to
ascertain. And In* seems vaguely to liold that they anj therefore
very approf>riat(‘ taxes with which to rncH't expemditure* whose
benefits it would be equally hard to apportion. Such taxes har-
monise with the organic contjoption of society. ]'"or doc^s not the
fact that a man can shift a tax show the oi‘gani(‘- natun^ of the rela-
tion between him and tlie community? AjuI so, in tlu^ nanu^ of the
new idea of the soi’ini organism, which is beginning to piuTueale
modern thought, indirect taxes are approved. Bor Ihfs “newer
theory of finance” Professor Seligman claims the title of “The
Social Theory of Finance.”

This is all very weak and slovemly. W^^ak and sluvtmly.
indeed, Professor S(^ligman frequently is when he comes to
matters requiring sustained, abstract thought. He is apt. lo shirk
a ditiieuli analysis and take refuge under cover of some vague
iind shapeless phrase. 7diat it may be possible, to asc('rtain, not
the uidividuals, l)ut the classes of society uj)on whom indirect
taxes fall, that, in fact, such taxes burden tlui jxjorer classes to
a greater extent than do direct taxes, that there are sumo argu-
ments for, and some arguments against, so bui-dening the poor ~
in short, all the questions really relevant to the' pros and cons of
indirect taxation, Professor Seligman does not so much as alludt^
to. He is far too preoccupied with Ids contemplation of this new
discovery of the social point of view, from which altitude he
beams upon indirect taxes a genial, and, for the most {)art,
undiscriminating approval.

For the rest. Professor Seligman ’s view^s are probably sutfi-
ciently well-known to readers of the Fconomic JouHNAii. He

390 THE ECONOMIC JOURNAL * [SEPT.

hoUs by the principle of “faculty,” though he defines it in his
own way. Faculty has a “production side” as well as a “coh-
sumption side.” Equality of sacrifice, or any variation of the
idea of sacrifice, covers only the consumption side. The idea of
“privilege” must be taken into account for a well-balanced view
of faculty.

Not only how much a man has, but how he got it, how easily,
with what assistance fiom the State, and with what prospect of
an easy continuation of such income, must be ascertained before
a man’s real ability to pay is known. From this central stand-
point — a compromise betw^ecn the exaggei'ations of the advocates
of the old faculty theory, and of the single-taxers — Professor
Seligman looks with sympathy upon the general tendencies of
the time.

But it is not the discussion of general principles that form
the main, or the jnost valuable part of this work. It should be
read rather for the fnast(‘rly and reliable digests and summaries it
gives of complicated tiscavl systems, and tlie bold yet sagacious
use which is made of the method of (M)mparative study.

H. D. Henderson.

The Sluvdard of Value. By Rir Bavid Barboqr, (London:

Macmillan. 1912. Pp. xvi + 242. Price 6.9. net.)

Stitdi?nts of l^lue Books dealing with morudary topics
have long been aware that there has been no administrator in
modern times with a firmer practical and theoretical grasp of
the subje(*t of Money than Sir Havid Harbour. Now^ for the
second lime, lie has turned author and has jirodueed a volume
fully worthy of his distinguished reputation.

The object of the book is tw'ofold. The first part is a state-
ment of that view of monetary theory on which Sir David has
based his practical policies. The second is an apologia for these
practical policies, in particular his apparent treachery to Bi-
metallism and the circumstances connected wdth the closing of
the Mints in India. The theoretical preliminaries are very admir-
ably tieatfal, and are, in the opinion of the prissent review^er,
much suptu ioi' to I he w ork in these fields of all but a very few
academic (H:onomists ; and Chapter X., on “Alterations in the
Relative Value of Ditferent Monetary Standards,” contains a not
unimporiaril c*ontribution to ])ure theoiy (about the practical
af)plication of which something is said below). But perhaps the
historical and personal parts, constituting, as perhaps they do, the
most imj)ortarit commentary in existence on the Bimetallic con-

1913] BAEBOUR: THE STANDARD OF VALUE 391

troversy, are of the greater interest, and I will devote my review
mainly to these.

For a very long period Bimetallism was almost perfectly
effective : — “Taking the two markets of Hamburg and London,
the highest market ratio from 1801 to 1870 was 15*8 to one, and
the lowest was 15*48 to one, though during that period the relative
production of gold and silver varied from 24 to 76, to 78 to 22.”
In 1872 Cairnes wrote that he believed a serious divergence in
the relative value of gold and silver to be “practically out of the
question.” Sir David Barbour holds that the statesmen who
initiated the monetary charges of the ’seventies, whether they
acted wisely or not, certainly did not. realise in the least what the
consequences of their action would be. “The world drifted into
Bimetallism and drilled out of Bimetallism without foreseeing
the probable consequences of eithe r (diange.”

The actual consequences oI the partial demonetisation of silver
led, as we all know, to an historic controversy. With his appoint-
ment to the Iloyal C'ommission on (lold and Silver in 1886,
Sir David Barbour began to take a prominent part in it. TI(»
belonged to the Minority party (live out of twelve) in the Com-
mission, who “foresaw serious risks in the futures if the 8im})le
gold standard was adhered to.” Events have sided with the
njajority, but Sir David shows conclusivtdy that the reasons on
w hich their recommendations were based are o})eTi to ' serious
criticism. T^hcir whole attempt to distinguish between that part
of the fall in gencu'al prices which w'as due to the “Appreciation
of Gold ” and that part whicdi was due to other causes was founded
on confusion ; and the following passagi* from tlud]’ report is not
one wliich can till the later critic with confidenc(i in the grasp
of montdary theory by these Commissioners: - “We believe the
fall (in general prices) to be mainly due, at all events, to circum-
stances independent of changes in the prodiudion of, and demand
for, the precious metals, or the altered lolation of silver to gold.”

Sir David then turns to the causes which led up to the closing
of the Indian Mints. His explanation of the fall of the silver
exchanges, based on the theoretical tliscussion referred to above,
is, I think, in the emjdiases be niak(‘s, somewhat new, and at
the sanje time very convincing. The fall in the gold price of silver
was not mainly due, lie afiFirms, cither to the fall in the demand
for silvei’ due to its partial demonetisation or to any increased
output of silver from the mines. Jt was to be explained by the
fall of the general level of prices as measured in gold. If the
exchange between gold and silver is to remain steady, while

392

THE ECOjNOMIC JOURNAL

iif[spPT.

general gold prices are falling in gold countries, then the general
level of silver prices in silver countries must also fall, in order
to preserve the balance of trade between the two and to prevent
the silver countries from being flooded with goods from the gold
countries for wliich they are unable to render other goods in
exchange. This fall in silver prices, if it took place, would release
silver from circulation. Quite apart, therefore, frorrj new sources
of supply of silver and the falling ofl‘ of old sources of demand,
this teiiflency to release silver from circulation must result in a
substantial fall in the gold price of silver, unless — which is im-
probable in the absence of the bimetallic tie — the demands for
silver elsewhere or for other purposes respond with great elasticity
to a. rise in the relative cost of gold and ar(‘. not much dependent
on the relative cost of other commodities. As a matter of fact,
silver })rices fell but slightly between 3873 and 1887, so that the
prolonged fall of gold }jriccs during this period had to be mainly
compensated by a fall in the gold price of silver (i.c., by a fall
in the silver exchanges) ; otherwise equilibrium of trade could
not have been maintained between gold-using and silver-using
countries. As soon as the bimetallic link was broken and a large?
group of gold-using countries had been formed, the gold price
of silver became chiefly dependemt, so long as there was still an
important group of silver countries, on the ratio of the general
level of* gold prices of articles of international trade in gold coun-
tries to the corresponding level of silvei jaaces iu silver countries.
In the particular (drcumstances of the 'seventies aiid ’eighties the
governing cause of th(‘. fall in tlie gold price of silver lay in
the fall in (lie value of tlu) denominator of tlie above fraction. As
8ir David BaJ’bour puts it, tlie fall in exchange, arising c ut of the
tendency of trade })rices to equilibrium, was the cause of the fall
in the gold juice, of silver, rather than the other way round. This
being the c^ase, “any attempt to restore the old pai’ of exchange
beiwetui the two metals by purchasing limited quantities of silver
was hound to piove too great a burden for any nation that under-
took it,” for it would have meant “the purcha.se of enough silver
to caus(' a fall in silver juices in ]ndia and ebewdiere of quite
3U j)er cent.” “Ho far as the inter(*sts of Bimetallism were con-
cerned, the jHirchase of silvtT by tlii' United Htates was probably
mischievous, as it relieved the stnvn on gold.”

Sir David’s account of the part he himself plaj^ in the
closing of the Indian Mints is most ^interesting. His action in
recommending it w as a courageous * one, involving a complete
break of ideas from those of bimetallic friends of many years’

HOBSON : GOLD, PIUCES, AND WAGES

393

lOlS]

standing. The governing consideration in his mind seems to have
been that a permanent difference of monetary standard between
India and the chief countries with which she traded was intoler-
able ; and there could be no permanent remedy “except either the
general adoption of the system of double legal tender or the exten-
sion of the single gold standard.” As soon as proposals for the
first alternative seemed to be definitely defeated, Sir David
Barbour did not delay or hesitate in falling back on the second.

To those of us who were in our nurseries when these things
happened, it is an interesting speculation w^hether, living then,
the Bimetallic or the Monometallic camp would have contained
us. To a cool backward glance, Sir David Barbour’s course seems
to have had very much to recommend it. The choice of one
metallic standard lather than another for any individual country
is rightly guided by historical circumstance ; it is not a master on
which theory as to wliat would make the besf universal standard
should count for much. In the ’eighties bimetallism must have
seemed worth fighting ior. l^ut the course of events — American
politi(*s, South African gold and so fortli— defeated it. llie wise
bimetallist should have liastened to acknowledge defeat. The
statesmanlike opportunism of Sir David Barbour appears to such
a backw’ard glance in a stronger light than the dogmatisms of, for
example, Sir Robert Giffen about the impracticability of a gold
standard or the immeasurable evils of a managed currency.

This book is of a very rare type — wonderfully full of practical
wisdom, yet showing at the same time the intellectual sharpness
and precision of a first-rate academic mind. Happy the country
which can discover in its aduiinistrators so fine a combination
of gifts.

J. M. Keynes.

Gold, Prices, and Wages. By J. A. Hobson. (London :

Methuen. 1913. Pp. xi-fl81. 3,s*. 6d. net.)

One comes to a new book by Mr. Hobson with mixed feelings,
in hoj)6 of stimulating ideas and of some fruitful criticisms of
orthodoxy from an independent and individual standpoint, but
expectant also of much sophistry, misunderstanding, and perverse
thought* In some of his books the first elements greatly pre-
domii^lie. In his latest wmrk now before us, the latter prevail
almost throughout. The book is a very bad one, made much
worse than a really stupid book could be, by exactly those charac-
teristics of cleverness and intermittent reasonableness which have
No. 91. — VOL. yxiJi.

E E

394 T^B ECONOMIC JOUBNAL [SBPT.

borne good fruit in the past. I will endeavour to elucidate his
main contentions.

Mr. Hobson begins by distinguishing the difl'erent sources of
the supply of money — new gold from the mines, additional credit
from the bankers, and money “derived from prior acts of sale.“
]f all money were derived from prior acts of sale, the aggregate
receipts would rise and fall with these acts of sale, and therefore
prices must remain stable. This would be the case with a
stationary community or wdth one “growing in such a way that
it did not shift the proportion of its demand for different classes
of goods.” If that is to say no new gold were to be mined and
no new credit created by bankers, but W'e were all to prodiK*e,
buy, and consume double (say) of what we do now, then prices,
according to Mr. Hobson, would remain stable. “The only way
in which prices could change in a community where money was
entirely derived from previous receipts would be ... if a larger
proportion of money were directed to buying goods w’hose j)ro-
duction conformed to the so-called law of diminishing returns,”
and conversely. What is one to say to such an argument? It
sounds like a parody of economic reasoning ; the words have, in
a way, the right sort of jingle to the ear, but the mind is left al
a loss.

Mr. Htfbson seems to be cxjntent with this eoncl'./sion for its
own sake, and does not make much use of it. lie passes <m to
])rove that the gold produced during the last lift(a*n years c'annot
have had any appreciable influence in raising pricies. Since tlu*
net incoujcj of the Jiritisli nation is about ,1)00,000,1)00, we may
estimate the gross turnover at XiU, 000,000, 000. I'he gross turn-
over of this country cannot be more than one-tenth of thai ol the
world. “This would give T 1 00, 000, 000, 000 as the quantity of
money operative for a year. To this sum thej(^ has been added
(annually) from an (‘xtraneous source tla^ gross income of th(‘
gold mines, an amount of £07,000,000. The gross iiic-ome from
gold-mining will have precisely the same amount of influence on
general prices as the same gross income got from the textile or
metal industries. The effect w'ouid be an increase of the aggre-
gate quantity of money to the extent of nyacDD- The influence
u|K)n [)rices would thus be considerably less than iV

cent. The actual influence of this atldition to money in raising
prices would, of course, be much less, if alknvance were made for
the increase of goods which has been goiij^ on.” It seems almost
incredible that Mr. Hobson should have convinced himself by
such an argument. Jt appears to be based on the assumption

1913] HOBSON: GOLD, PRICES, AND^WAGES^ 396

that no new coin can be used more than once ; but it depends,
I thii\k, in Mr, Hobson’s mind on an earlier and rather obscure
argument that new money only influences prices the first time
it changes hands.

Mr. Hobson turns next to the confutation of the theory “that
an increased supply of gold somehow will necessarily expand the
volume of credit which is said to be based upon it, and therefore
enhances pro})ortionately the entire voluiiie of purchasing power.”
If the theory were true, we should find, now tliat prices have
risen, Mr. Hobson says, a lower average' rate of discount than
formerly, and a larger actaimulation of gold in tlu‘ reserves of
banks. Of coui'se, t he average rate of dis(‘.('unt has nsen. and not
fallen, but Mr. Hobson must know very well that the adherents
of tlie theory hr i-. disputing mainiain, not that th(^ average rale
of discount must fall, but that new gold in bank reserves has tlu^
temporary effect of nmkiug the rate lower than" it 'tPoiild otlierivise
have heeit—kn he quotes the relevant passage from Dr. Marsluili’s
evidence before the Gold and Silver (Commission souu' pagi's
further on, and points out, himself that the rise in the avt^age rate
of discount is mainly due to the greatly increased demands for
capital in new countries. Mr. Hobson goes on to deny the second
indication, namely, the accumulation of gold in the re^«orves of
banks, basing his conclusion on the amount of gold ii^ tlu'- issue
ilepartruent of the Bank of England (not even on the Ikink’s
reserv(‘, and in s}>ite of his own statement ■ -p. 8U -that there
have been (‘-oiisiderable new accumulations of gold in the reservt^s
of English Joint Stock Banks), and slips on tvv(» fiages later
(p. 43) to apply (his conclusion to “other I^airopean counlries,”
although, since he himself gives a table setting forth the conlrary
on p. 4i)y he must well know that this is not the case.

But having thus disposed of the orthodox contention and
greatly belittled the part played by gold in the raising of f)rices
and tlie manufacture of credit, Mr, Hobson seems to couu^ back
to a position very little removed from (hat which ht‘ has
demolished and hardly consistent with the wani})()ns he has lately
used. “Gold is not,” he now maintains, “the chief efficient cause
or stimulus of the enlarged credit, but it is, or may be, an essential
or at least a facilitating condition of its production.” “Had
there been,” lie admits on p. dl , “a corislriction of tlie gold supj>!y
and bank reserves been low, the price of money would have been
higlu'.r than it has been, fhe aggregate amount of borrowing less,
the subsequent demand ior goods reduced, and the rise of prices
correspondingly less.” If Mr, Hobson merely wishes to dfuiy

E K

3d6 tHE ]^ONOMia ^UEN4% [sept.

that the new golS has been “an emcient cause “ of higher prices,
while admitting that it has beed a necessary condition of them,
his earlier arguments have proved too much.

* Whether the new gold has been a necessary or only a favouring
condition to the manufacture of new credit, Mr. Hobson sees the
main explanation of the increased credit elsewhere, namely, in
the greatly increased volume, chiefly arising out of the borrow-
ings of Governments, municipalities, and railways in new countries,
of “stocks and shares and other certificates of value.” “All such
modern saving can furnish material for the creation of more
credit.” The argument he bases on this is founded on two very
old confusKjns, which always have been and j)robably always will
be made by certain types of mind having, as it were, a natural
affinity to this way of thinking. The first is between the volume
of credit (measured in terms of goods) and the value of credit
(measured in ternis of money). If credit, Mr. Hobson argues,
is based on actual goods, and every piece of w^ealth carries with it
“a credit-note representing its present value,” how can it ever
become redundant? “Each specific piece of wealth w'ould have
a corresponding token of general wealth attached to it. That
token could be used for general purposes of purchase, its recipient
holding a claim upon the general wealth into which the specific
piece of v/ealth will be convertible. The volume of credit would
evidently expand or contract with the expansion or contraction
of the value of the goods which command it, and the notion of
an excess or deficiency of ‘ money ’ would be meaningless.” This
is newly transmuted. But can we not hear in the distance the
voice of Mirabeau urging on the National Assembly the issue of
assignats? — “Paper money, we arc told, will become super-
abundant, Of what paper do you sj)eak? If of a paper without
a solid basis, undoubtedly ; if of one based on the firm foundation
of la,nde<l juoperly, never. Ileabsorbed progressively in the pur-
chase of the national domains, this paper money can never become
redundant, any more than the humidity (jf the atmosphere can
become excessive, which descends in rills, tinds the river, and is
at length lost in the mighty ocean.”

The second confusion, of which I spoke above, is between the
two senses of the word “credit,” the sense in which it stands for
the method by whicli th(* control of liquid wealth is tera|K)rarily
transferred from those who have less need of it to those
who have more, and the sense in which it stands for methods
of making payments and effecting exchanges without the use
of actual coin. There is, of course, no necessary connection

S97

1913] HOBSQK : BRICES, ',ANI> WAGES

c ii* " •

whatever between these two. If a bank receives money from

depositors and then lends it out again to borrowers against suit-
able security, the use of coin as a medium of exchange is in no
wise diminished and prices, directly at any rate, in no degree
affected. Only when a bank passes to its other fnnciioii and
creates notes, bills, or cheques as a means of effecting exchanges,
does the influence on prices come in. Mr. Hobson has muddled
up the two senses to the extremest point conci'ivahle, and ascribes
to causes which have facilitated the development of the first
function results which could only arise out of the (lev('Iof)mont
of the second. No doubt the creation of suitable security, due to
the opening up of neAv cxiuntries, has greatly developed the
mechanism of credit in the first sfuisc. But I doubt wdiether the
development in ihese new countiies of credit in the second sense,
though cv)nsidenihle, has kept pace with the growdh of ousiness
and the demand for media of exchange in these sa-me new
countries. If, tliereforc, gold had Ix'en mined at tlu' same rate
as in recent years, and new countries had not l)e('n dcweloped as
they have been, prices would, J expect, have', he('n appreciably
higher than they actually are. The development of South
America, for example, since credit in the second sense is less
perfectly develojved there than in Europe, has retarded (h(‘ I’ise of
prices, not, as Mr. Hobson argues, hastened it, hy affording a
fresh source of demand for large quantities of gold. 1 am in-
clined to think, therefore, that his main practical conclusion is
exactly op[)osite to the truth.

There are numerous other points of detail which might he
worth dealing with if this review werv. not already so long. ] will
catalogue some of them : — The confusion of borrowers, \vl)o are
mainly the entrepreneur class and the holders of ordinary shares,
With the poorer part of the community (p. IIG) ; the view that
“the increasing proportion of the energy of modern nations that is
applied to the distributive, as distinguished from the productive,
trades “ tends to raise prices (based on the eternal fallacy that only
the latter are truly productiv(') ; the opinion that a rapid intro-
duction of improved industrial methods is socially wasteful because
it involves the scrapping of the older plant ; and tlie tlu'.ory that
the rate of interest and the level of prices arc^ but two faces of
the same phenomenon, since one is the hire-price and the other
the j)nrchase-price of mon(*y. lUiis last f)()int deserves a little
more attention. “It Wv>uld be impossible to conceive,” Mi’.
Hobson wTites, “the general price for houses U) be rising over a
period of years while the rents of ihese bouses were falling.” This

398

THB ECONOMIC JOURNAL

[sept.

is SO, apparently, because “if motor-cars become cheaper to buy,
we know they will become cheaper to hire.” Since the rate of
interest has risen while the purchasing powTr of money has fallen,
we have a paradox to explain. Mr. Hobson is led' to the view
that “money has not really a sale-price at all.” For the extra-
ordinary th(H)ry he builds on this, the reader must be referred to
his last (diaptcr.

Belonging to no one race or age more than another, there
lives an intellectually solitary j'ace of beings who by some natural
prompting of the soul think about monetary theory in certain
specific, definite ways, superstitious or delusive, mystically , ,^not
ma.terially, true, if true at all. All of these will find their natural
instincts ('X])r(‘ssed here in forms more plausible-l epical than they
can usually shape theiiiselves. Mr. Hobson has given us the
Myl.hology of Aloriey, intellect ualised, brought u[) to journalistic
dale, most suUJy mbularded (ajid this is bow it diflers fr’om the
rest) with temporary concessions to reason.

e}. M. KlilVNES

Lu.tks ufid ('(ipdahsirius and Kricg mid CdfiHdlisnuis. By
Wkunur SoMBAUT. (Tieif)zig: I )uncker and Humblot. lOlIh
Pp. and pj). Kacb volume fi marks.)

SoMirtUT’s studies for a nc‘\v edition of his Modmi
have h'd him far. So mii(*h materia,] has accauniilaied, not all
strictly economic, that he is publishing it in inonograplis. The
first was his Dir Judni juid das Wirfscliaflslchcii. Tbes(' \olumeB
ar(' of the same class and w^orkrnanship. There' is the same immense
reading and the same cocksureness in all juoviiK'.es of knowdedge;
the un])nmed, slangy style that infeels a revif'w^er : the real, yet
slightly over-adv(‘iiised, originality, and the tendfuicy to drive a
good notion further than it will go.

The titles roughly indicate tlie tlu'ses, and tlie suh-title to the
first volume— Liebe, Luxus iind Gapitalismus -indicates the j)ari
of it that is not sirictly eeonomic. A central thesis is common to
both volumes, namely, that the fashionable conru'ction of
capitalism with production for a geograj)hically wdde market is
not of })rimary importance in the “early capitalistic” age. Idio
media'val weapon industry had a. wide' market, hut its industrial
organisation was “Handwerksmannig ” (Krirrf, p. 92); so was
that of the Yorkshire clothiers of the eighteenth century, whose
goods w'ent far and wide (Luxiis, p. ‘208) ; while many of the
luxurious industries worked mainly for the local (‘ourt or metro-
polis, yet were early organised on capitalist lines (Luxus, p. 138).

1913] SOMBART : LUXUS UND CAPITALISMUS 399

At the opening oi'Luxus Sombart describes the mixed “fendal-
bour;,^eois ’* character of West European society in early inodei n
times, a society in which new bourgeois wealth was used to outbid
the display and the expensive personal following of the true feudal
establishment. Then he shows how the great towns were
primarily (Consuming, not producing, centres before ihe nineteenth
century. Cobbett would have relished his assault on their “tax-
eating” and rent-eating populations. He next plunges into “ihe
secularisation of love ” and its connection with the growth of
personal luxury — first at the (-ourt of Avignon, and so down to
Versailles and Hanoverian London. Tiiixury begcds capitalism,
and all-”Or almost all —luxury Sombart would trace back, on one
line or another, to lust. This section is a monument of somewhat
unsavoury leamiir.. His style -never cliasle- hero slides down
to the lev^'d of Ijis theme, and his argument is not alwayi, con-
vincing. He has to piovc, for instance, that- the capitalism of
the sugar industry is rooted ui womarrs love of sweets. I’erhaps
it is true, that the most self-indulgent and “secularised” women
eat most chocolate; but in discussing the demand for sugar is it.
fair to leave out rum?

As he shakes off his erotic obsession the argument gathers
weight. The industrial revolution of (’ighteenth-contury
England is connected not so much with a growing population as
with a, more varied and luxurious consHumption, and with the
growth of a “parasitical ” population in Ijondon. Sombart shows
how many of the most favoured and most capitalistic industries
of the age of mercantilism were indtisirics dr, luxe. Silk is an
obvious case in point ; so is porcelain ; so in a- great measure is
glass. Many similar industries are adduced. He suggests that the
more “luxurious” were also the more capitalistic branches of the
English wool industry. This suggestion he V('gards as liis f)\\ n -
“die Frage ist, soviel ich sehe, noch niclit bestellt anchors” (p.
190). But his references to the literature an'. wretchcMlly inade-
cpiate*. If he had looked a little outside the text-books and the
report of 1806, he would have had no difiiculty in proving that
the most capitalistic branch of the industry in the late seventeenth
and eighteenth centuries tJiat of Norwich — was also ihe most
“luxurious.” He would also have found that it depended both
on ihe demand dr luxe and pn a very wide foreign market : since,
fortunately, economic history will not adapt itself either to
dogmatic generalisation or to dogmatic counter-generalisation.
Sombart, as usixil, has laid his hand on a. true cause whose import-
ance has often been underrated. It would be easy to fortify his

400 -THE ECONOMIC JOURNAL fSKPT.

argiimeiit, for instance, from the lives of Wedgwood and Boulton.
The Soho works made buckles and fancy clocks and ^ sorts of
Brummagem luxuries on a large scale long before they ri&de steam
engines. Ihit Sornbart is never content with judging- a suspected
and neglected cause as a member of a gang ; he always treat
it, at any rate provisionally, as the sole criming.!: After all, that
is an effective method of propaganda, and he has plenty of
scientific enemies who will arrest the other causes and denounce
him as a wrong-headed judge.

In the Kricg, as in the Luxus^ he over- emphasises the novelty
of his conclusions and the range of his research, though some of
the conclusions are very fresh and very striking, and the research
is generally quite wide enough. '‘The following information
comes from the most varied sources ,i’ he ted Is us (p. 47) at the
opening of an important section on tlui English Navy, in which
he cites just, foiir authorities, two of them \ery well-known naval
histories and a third Anderson — no great variety after all. The
authorities are excell(‘nt, and there was no need for more- -nor
yet for the boasting.

The argument runs in tins way : medifeval war consumed free
capital and hindered capitalism ; yet even mediaeval war
strengthened the high finance —Jewish, Italian, dx. “-while the
wars of efjrly modern times, and the taxation and borrowing that,
went wdth them, did so still more. National debts were incurred
for warlike ends, and so “w^ar made the Bourse'' — war and the
dew^s, Soinbart adds, recalling Ins earlier wmrk. Also war made
the '' THhru'tisch '' the man-machine, t he drilled unit directed hy
a captain of wair, long before just such machines wacre w^antecl by
captains of industry. In this unholy task, it is argued, w^ax was
materially helped by Puritanism, which turned the wayward
“natural man’’ of the Eenaissance into the “ Pflichtenmensch,**
the Ironside, the ancestor alike of the Nonconformist mill-owner
and the efficient “mill-hand.” “ Puritanische, iriilitarische und
kapitalistische Tugenden sind . . . giosstcn teils dieselben ”
(p. 29). “Zuchl ist das Leitmotiv.”

The most brilliant section of the book is the study of the
grow^th of uniformity — including uniform — in the armies and
navies of the seventeenth century and its economic consequences.
First, men arm themselves; then the State supplies weapons
and clothes, standard weapons and standard clothes. You have
the first great '' Massenbedarf.'" Already in ]603 the English
Government is contracting with merchant tailors for 5,000
uniforms. So in the navy wdth standardised cannon. And these

1913] SOMBART : LtnftTS tmD CAPITAL1SMU8 401

things are wanted quickly, even ships. You must have organised
speed a^4^, large-scale operations. The building of one of the
great royaf ships of the seventeenth century was a gigantic enter-
prise, absorbing more of the national dividend of the time into
this unit of military “plant” than is absorbed in our own day by
any single act of '^production, military or civil. The sliipyard of
the naval foundry is the first “factory.”

It is a pity that Adam Smith did not go a few' miles from
Kirkaldy to the Carron wmrks, to see them turning and boring
tlieir cannonades, instead of to his silly f)in factory — which was
only a factory in the old sense of the word. And for our economie
historians, says Sombart with more than a litth^ 'ruth, “fliere
seems to he nothing but a textile industry where they are trying
to uncover the origins of niodern eapitalisni.”

Quite apart from its uniformity, the mere origins of the
military demand favoured capitalistic metliods bf supply, and had
indirect (‘onsequences of significance in the liistory of capitalism.
Bound about. 1500 no article bad such ar. imjx)rtant international
market as copper, because it. was wanti'd for gunmetal. ^riie
Buggers and their allies tried to corner the Venetian copi>ej-
market in 1498; and all the iiiid-Cfernian capitalists of the
sixteenth century w^ere mixed up in copper dealing an 1 copper
mining, among them the Hoclistetten, w^ho w'erc'- so clqsely con-
nected with the mining enterprises of the Tudors. Dr. Scott's
researches have prepared us for this ; he lias showui l]f)w closely
the rise of that typically capitalistic organisation, tlie Joint. St(K‘k
('Ompany, was connected with the military and political needs of
the crowm. It should he noted, however, by Sombart that the
Mines Boyal did not flourish greatly on the military demand, and
fell back on the making of copper pots and pans.

Where and w^hen the iron took the place of tlie bronze cannon
there was no slackening in the influence of the military deiiuirid.
The early days of iron -capital ism are everywhere closely con-
nected with gun-making. For instance, the first Scotch conces-
sion for a blast furnace and foundry (IfiHfi) has in view primarily
the “casting of balls, cannons, and other such useful instruments.”
And Sombart reminds us that coal was used successfully in
foundries long before it was applied to smelting, quoting Beck’s
Geschichtc des Eisens in sn|.>pori of the view that gun-ca.sting
was the great stimulant of improved technicjiie, in the foundiy.

It is easy to show lio’- standing armies affected the grow th of
capital cities, especially in Germany. P]ngland does not greatly
help the argument here. Nor would it, 1 think, be possible to

402^ the economic ^joubnal [sept

argue, in the case of England, as Hpnibari argues for Ciermany,
that the commissariat demand Rlimiilated the landwirtschaftiche
Grosshetrieb. He connects with it the rise of the Eittergut.
Perhaps a study of our commissariat during, say, the Seven Years’
and the Napoleonic Wars, might yield something to the purpose.^
For (iermany the argument is strengthened by the supplementary^,
contention tliat the export corn trade, in which it is well known
that the N. German Rittcrgutshesitzcr were so long interested,
was itself a military product, at least in part. The Dutch Baltic
corn merchants were largely concerned in army contracts, and
when Louis XTV. prepared to attack Holland in 1672 he bought^
his corn at Amsterdam (p.l41).

Fjngland and the continent supply abundant evidence of the
accumulation of capital in the sixteenth, seventeenth, and
eighteenth centuries by army contractors, mostly Jews. Among
them one may note A. F. Farvajal, “the great dew ” contractor
lor the Parliamentary forces, and Sam Oppenheimer, “ Kaiser-
licher Kriegsoberfaktor und Jude,” the business manager ofe the
campaigns of Prince Eugene.

In many countries the very foundation of a more or less
capitalistic cloth industry was due to the demand for aiany cloth.
Sombart elaborates this w'ell -known fact peihaps rather more than
is necessary, but, of course, it. is impf)rtant to his argument. In
the most important case of all, that of England. h(‘. allow' :, how-
ever, that the military influence w'as inconsiderable, altliough he
is able to establish the existence of a consiiieralde e\])oj t tradi' in
army clotlis during the eighteenth century; but here, as in the
Luxus, his treat ment suffers from imperfect knowledge. .Perhaps
German stdiolars will be able to say the same of his treatir.ont of
German history, as they have done so sucecssfnlly in conneetjon
wnth the modi[eval part of his Moderne Capitalismus, But, as
is always the case with Sombart, when all criticisms iiave been
made and all reservations entered, there remains a great body of
curious fact and exciting argument that has merits beyond those
of many more impeccable treatises.

J. H. Clapham

The J'hiffJish Factories in India a Cahndar of Documents. By
William Fohter.. J634-1636; 1637-1641; 1612-1645.

3 vols. (Oxford : at the (Jarendon Press. 1911, 1912,
1913.)

These tiiree volumes, the third of which has just appeared,
continue the valuable series of documents illustrating the history

40B

1913 ] foster: the English factories in ini>u

of tho English factories in Incliififroni their origin, and bring the
material down to the year IGlB* An apdlogy is dne to Mr. Foster,
who has b6en responsible so far for the whole issue, tor the
belated notice of the two volumes published in 1911 and 1012, but
the recent publication of another instalment ofiers an opportunity
to “review** the three volumes together. Not that “reviewing
in the ordinary sense of the term is really possible. Original
material of this kind cannot be discussed adequately within th(^
limits available in these columns ; and, indeed, Mr. Foster, by his
explanatory Introductions to eac*h instalnumt which summarise
the contents so carefully calendared, atul whicli draw tlie atten-
tion of the student to the noticeabh^ features in the documents
themselves, has to a large exkmt foresi.allcMl the reviewer and done
his work for hibi. It is, indeed, most satisfactory that the editing
continues to be in Mr. Foster’s hands, and we ho|)e it long will
be so, for the accuracy, precisioii and completeness which the
previous volumes showed are not less patent in this Iasi, instal-
ment. The editor very ])rop(‘rly acknov ledges his obligations to
Ml. Bull for the Indexes; as every student is aware, an ad(M|uate
index to collections of original documents is not only indisptms-
able, but may be no less valuable than an editor’s Introduction.
Mr. Bull’s industry and accuracy are just what is required to get.
the full bemdlt from Mr. Foster’s lucid and carelul prjia.ces.

T)]("-se tliree volumes c-ontain ahout 0b2 separate items ; with
two or tlire('. trifling exceptions they are drawn from the India
Office archives. Neither the Public. Becord Ofhee nor tlu' Indian
ixecord Offices contribute to the collection. It is worth noting in
particular that these contents “break ground wliich has b(*(ui
practically untouched by previous workers,” as the editor notes;
for with the termination at 1(534 of Mr. Wainshury’s Oalendar of
State Papers, Colonial, East Indian and Persian, Mr. Foster is
publishing original documents, hitherto only a^vaiilable in their
MS. form in the India Office archives. At the same time, it is
due to the editor to f)oint out tliat as everyone who has used his
Foundijuj >f Fort St. (leorgc (published in 1902) is aware, some
of this new material had already been worked up in his own vc~
searches. Mr. Foster has, in fact, robbed himself of the title of
being an original pioneer, and only lelt himsell the opportunity
of sprinting and setting the* Madras materia! in a wider context
by showing its relation to the affairs of the C^oinpany as a. whole.

No one would prut^nd that tlu^se volumes provide ‘ interesting
reading “ ; acmsory study would probably provoke from a general
reader the criticism of Sir Walter Scott’s farmer friend whom he

404 THB ECONOMIC JOUBNAL [SBPT.

lound taming over Johnson's Dirtionary, and who replied to an
obvious (juestion that, “the stories were unco various and unco
short.” These docuinents arc for students who will go to them
for different purposes the history, development, and difficulties
of joint-stock enterprise, the details of commence and trade be-
tween West and Kast, the rivalry of different European nations
in tlu^ Ear East., the political and commercial motives and objects
of policy, the characteristics of English, French, Portuguese and
Dutch in organising foreign trade and trade-settlements, the light
thrown on Indian history available from non-Indian sources (to
enuinerale but a few of the broad (|iiestions to which answers are
rcqnired)--but for all of these and many more there is plenty in
these sevejj hundred calendared items to justify and rewuird
patient investigation. And liowever “dull” tlie documents at
fjrst. sight appear, the human interest flashes on the investigator
in th(‘ tnost, unexpected manner. Human nature may be
avowedly expelled from bills of lading or comniercial reports, but
it creeps hack and will out, and not infrequently in a very vivid
way. Numerous examples from tluvse three volumes could he
givcji. I jet one suffice : it is taken from a r(q)ort hy Andrew
Trumball on the managers at Madraspatam (Sept. 18, 1614).

“Mr. Thomas Winter, another of your factors on the coasi ,
is hy estjmacion u’orth 80,000 ryalcs. . . . He hath marryed his
gentlewoman to a souldier : hy whom hee liad iwo chikhen, one
of which cainc into England in the Mary. And Mr. Day and hee
are very well versed in gameing, and noe day conies amiss to
them for that exercise. Mr. Henry (Ireenhill, another of your
factors on the coast . . . keepeth a gentlewoman. . . . At the
christening of his second childe there was sliote off 30(] brass
bases, with three vollyes of small shote of all the souldiers in the
castle and 13 guiins from the fort; but the powder was paid for
by him. . . . These foure gentlemen are all sworne brothers; and
when they j)erceive tliey may beiiefitt themselves in any project,
they passe an oath one to another to prosecute their intendments
and not dissent one from another until tlieir ends be obteyned,”'

The political framework of (Jiese trying years in the Com-
pany’s affairs is ade(]uat,ely, if briefly, sketched in the editor’s
introductions, where also the slow extension under numerous
difficulties of the Company’s operations can be pieced together.
A study of tlie documents in detail leaves at first the impression
that the obstacles of internal competition ^^t home, such as the
formation of “C’ourtier’s Asso(;iatiou,“ which threatened to be a
dangerous rival ; the vacillating and half-hearted policy of the

1913] FOSTEB : THB ENGLISH FAOTOBIB3 IN INDIA 405

Crown and its government (culminating in the Civil War, the
first years of which are covered in the last volume) ; the rela-
tions with the various Indian rulers; and, above all, the formid-
able opposition of the Dutch, must in the long run prove fatal to
the success of the East India Company. It is eminently charac-
teristic of our nation and the methods and temper of our country-
uien that their letters and reports are saturated with pessimistic
criticism, discontent, grumbling, and dissatisfaction, and that, the
evidence of progress has to be sought for between the lines of the
recorded pessimism. But if an impartial audit of the |.K)Hition be
taken it is clear not merely that the Cotjjpany was holding its
own, but (as the foundation of Fort St. George shows) was
developing on sound lines in many directions, ^rhere were, of
course, copious luistakes ; experience was being bought, and
sometimes dearly ; ships were lost, agents proved unsatisfactory,
openings for trade were tried and found inrposaible or too expen-
sive. Yet alter the most liberal discount for what had to be
“written off” has been made, the Company was still there and it
was moving. The dogged tenacity with which the ground won
was maintained, and the restless and fertile resourcefulness with
which new developments were planned and tried, lie at the back
of these three volumes of details, frequently wearisome and
monotonous, and suggest obvious reflections and inferences.
Whatever the English Government felt, Englishmen meant to
retain their foothold in the East, and they could only do so, as
the men on the spot discovered, by expanding Ihe sphcire of their
trade, influence, and power. Discontent, the outcome of a
determination not to stand still, is a good basis for ultimalc com-
mercial success.

These volumes bring us to the critical years of the (hvil War :
and they close an epoch. There are indications that the French
have discovered the East ; but as yet they are not seriously in
the minds of our traders. The day of Portugal and the Portu-
guese is really over. The enemy and rival are Holland and the
Dutch. As Mr. Foster succinctly puts it : “Not only in the Far
East but in Arabia, J’ersia, and India itself they (the Hollanders)
easily outdistanced their English rivals, alike in the number of
their ships, and the extent of their re.^ources.” Indeed, a political
prophet, ignorant of what was lo come in Europe, and acquainted
only with the material calendared here as far as 1G45, would have
been justified in predl at this stage that the future lay with
Holland. Mr. Foster’s next three or four volumes will probably
begin to reveal that Rocroy and Naseby cannot be ignored even

406

IHK ECONOMIC JOUBNAL

[8EPT.

by students absorbed only in the isolated story and complicated
details of the English factories in India.

One small suggestion may, finally, be pressed upon the editor.
Could he not number his volumes? We have already seven or
eight in this valuable series, and hope he will give us many more.
Jhit reference is very difficult and cumbrous at present, because
the sole method of differentiation in titles lies in the years covered
by each instalment, c.g., “Tlie English Factories in India, 1G12
1G45.” If a numerical sign could be added to the title the'boon,
a very easy one to grant, would much facilitate relerence and use.

The next volume in that case would be “ VIII., 1045 The

advantage is obvious ; the additional trouble would be pracftically
nil. i

C. (jRANT Robertson

The French E^wolution of 1848 in its Economic Aspect, Vol. I. :
fjouis Blanc’s Organisation du travail. Vol. II. : Emile
Thomas’s Jlistoire dcs ateliers nationaux. With an intro-
duction critical and historical by J. A. R. MARRfOTT.
(Oxfijid : At ^dio (darendon Press. 1913. Pp. 284 and 395.)

“This edition has been pre[)ared })rimarily for the students in
the Honour School of Modern History in Oxford.” It would,
perhaps,* be asking too much of the trained economist that he
should peruse these volumes, for his wants an', airjdy met by
curves and equations and excursions into latter-day statistics.
But to those unt?'ained economists who can tolerat(^ hi.story the
documents here published arc of surpassing interest. When the
student has finished tliem, he will ask hungrily for more; and he
may be directed to two further volumes, published in Paris in 1849
(copies of which can be consulted at the (loldsmiths’ Jjibrarv in
the University of London) : “Tje Droit au Travail an Luxembourg
et a I’assemblre nationale,” with an introductioii by Emile de
Girardin.

The Right to Work in France, like the Right to tlie Whole
Produce of Eabour in England, was in its day a great reality to
the working classes of that c.ountry. With the introduction of the
labour exchange and insurance against unemployment, it is
perhaps not likely to reappear as a formidable cry here ; but so
recently as 1905 a Bill embodying the principle of this right, the
Unemployed Workmen Bdl, was introduced into Parliament at
the instance of prominent members of*liie Ijabour Party. The
events of 1818, th(‘refore, have still some interest for the student
of modern affairs.

407

1913] MAEBIOTT : PBBNCU bevoluhon op 1848

V, ^ -

Thf- National Workshops, which Thomas directed and whose
history he here narrates, were justly repudiated by Blanc; as the
offspring of his Scheme for the Organisation of Labour. Never-
theless, but Tor Blanc the National Workshops would never have
come to be. In his Scheme he promised ITopia : at his instance,
on February 25th, 1848, the Provisional Government proclaimed
the Eight to Work and the opening of workshops for all who were
without work. Even if the Government had genuinely wished the
workshops to succeed , they would still have been of the nature of
relief works, and as such entirely obnoxitius to the vision of the
multitude.

Ernile de Girardin’s first volume, relating the pre feedings of
the Government Workers’ (-ommission at the I juxembuurg, con-
firms this opinion. Hen* T^danc had had his chance to get things
^(^one; and v/hat wore these things? Eeduction of the hours of
ti^ork by one hour, arhitiaiions, abolition of task work- and co-
ojjcratiVe piodiiciive societies of working men. Thi'se wtire gcx3d
things, but. they fell far short of the millennium, and it was the
millennium which his Scheme projected. We may find the' sequel
of it all either in the little co-partnerships wliich gradually died out
in Paris in the ’fifties, or in the debates of the newly eleetted
National Assemlily (de Girardin, Vol. 2), when the Eight to Work
was rejected from the ( /onstitution in favour of a cautious declara-
tion of the State’s duty to “assure by assistaiice, the existence of
all ikxmIv citizens, whether by procuring work for these needy
ones, or by giving, in the family’s default, succour to those
incapable of work.”

The Editor’s sketch of these events is very good, hut he
makes (p. xix) an unfortunale slip in tlirt'e times writing
Morellet, the free trader and friend of 'Purgot, for Morelly the
communist; and he is equivocal, as it seems to us, in his scat-
tered allusions to the origins of Socialism.

“Tlius far had French Socialism gone before the outbreak of
the French Eevolution ” (p. xix), says the Editor in the para-
graphs headed “Morellet (sic), Mably, and Babeiif ” ; and further
on (p. xxvi), “A similar fale attended the Ovvenile comaiunities
founded on Fourierite principles in England.” The Owenite
communities were not founded on Fourierite principles, but on
Owenite principles, and there 1... ground for believing that the
words Socialism and Socialists were first applied io the leaching
and disciples of Eobe"^ Holyoake, in his History of

Co-operaiion, Ii5, says : “For thirteen years now [1831 --44]
co-operation has to be traced through Socialism. Store-keeping

408 THB ECONOMIC JOUBNAL [SBPT.

had in many instances failed. . . . Grand schemlfl were revived.
This state of things came to bear the name of Socialism.” And
again, I., 144: “The members of the Grand Society of All
Classes and All Nations wisely refused to be called Owenites,
although they persisted in their affection for Mr. Owen, whom
they designated at the same time their ‘ social and right reverend
father.' At the Manchester Congress of All Classes of All Nations
[1837] . . . they determined to call themselves Socialists.”
And in the diary of William, brother of Robert Owen, published in
1906 by the Indiana History Society, there occurs under the date
“Nov. 21, 1824,” the following entry : “Mr. Loyd after dinner
. . . returned with us [i.e,, W. and R. Owen], and we read to
liim the pro{X)8al8 for a socialist community.” Louis Reybaud,
in the Preface to his Socialistes ModerneSy dated 1856, says :
“ Voici vingt ans bientot qu’au d^but de cette suite d'etudes, j'eus
le triste honneiir d’introduire dans notre langue le mot de
socialiste How the British Goveimment came to be apprised
of the existence of Socialism is indicated by an entry book of
the Home Office marked “1840 — Socialists,” containing copies
of letters to incensed prelates who had complained of irreligion
and blasphemies at Queenwood and elsewhere.

It may be said, of course, that this is a mere dispute about
words. • But if that be so, there is no reason why we should not
trace Socialism back to Plato, through Sir Thomas More, the
Diggers, and all the Utopians and makers of communities. It
may be added that none of the writers known as the Ricardian
or early English Socialists call themselves by this term, or even,
so far as we can find, use it.

E'inally, on p. xlviii., the Editor allows liimself the lollowung
cryptic utterance : “In the sphere of distribution Co-operation
has already to a large extent achieved it [victory] , and has
achieved it in fan competition. That it may win an equal
measure of success in the infinitely more difficult sphere of pro-
duction is the sincere hope of many who have scant sympathy
with the principle of State Socialism ; provided always that the
victory is won without infringement of the rules of the competi-
tive game.” To what does this refer? If to the workers' co-
partnership societies, then the hope, though sincere, is utopian.
If to production by the wholesale federations of co-operative
stores, then the scanty sympathisers with municipal trading will
one day be grievously disillusioned. C. R. Pay

1913] MABTIN ; HISTOI|tE FINANCifeBE DB L’ANGLETEBEE 409

Histoire Financihe et JEconomique de V Angleterre (1066-1902).
By Rtiennr Martin. 8vo. Tome Premier, pp. xii + 512.

Tome Second, pp. 642. Paris : FtMix Alcan. 1912.

The author of this considerable work published some years
ago (in 1905) a careful and instructive study of the direct taxes
levied in bhigland by the central Exchequer and by local authori-
ties. The sequel of that successful beginning of fiscal inquiry
has grown in scope and size until in the two volumes before
us, containing together about eleven hundred and fifty pages, he
attempts a more ambitions, comprehensive plan. His present
aim is not merely to review the entire financial history of our
country across the space of the eight centuries and a half which
have elapsed sincr Jie Morrnan ( ■oiiquest, but also to include
very properly in tliat long conspectus an account both of the
specially economic and of the more generally political surround-
ings by which fiscal change has been attendt*d, influenced, and, in
part at least, determined.

Two further (diaracteristics in his treatment of his vast theme
require some notice. His narrative ends with 1902, although a
description of actual existing arrangements had belonged to his
original scheme, forming the appropriate appendage to the
precediiig portrayal of the past. But as he significantly lernarks,
employing so inapt a simile, the “orientation “ of British finance
appears to have been altered so fundamimtally during the last
few yt^ars that the J*apid and numerous clianges wrought or im-
pending make a distinct breach in the continuity which had
befoH'- prevailed. Together with the accompMuying disturbance,
which, as lie stales, has alTech^d the very ioundatiims of our
ancient Constitution, they mark the o[)ening of a new order of
affairs; and they amount to an upheaval Cline boulcvcrsement
of former traditions.

Tlie other peculiar feature of the book, which is p(‘rhaps more
open to objection, for impairing the unity of its design, is the
Introduction, in which the financial history of the writer’s own
country under the ''ancicn regime, ” is vividly and shortly sketched.
But the digression, as it may seem to English readers, supplies
the reason, or furnishes axi excuse, fur some intructive contrasts
between the methods pursued and the results achiev(‘d on the
opposite sides of the C’hannel. lliese may well be ifieasing to us,
for they offer the attractive incense of genuine admiration; and
they may prove not uninteresting to the author’s (‘oinpiitriots,
whom, in his own words, he bears in mind throughout his task,
endeavouring for their benefit to “point the moral “ of liis tale.

No. 91. — VOIi. XXIII. F F

4H)

THB ECONOMIC JOURNAL

[sept.

M. Martin, then, approaches his subject from the position
of an appreciative foreign observer of our record and our institu-
tions. In the resume with which, ending his large enterprise, he
finally lays down his pen, he selects for special notice and approval
certain traits of our past financial legislation and administration.
The one is that, while in his own country the wish and power
of the Jving have sufficed to impose taxation on the subjects,
English taxes have required and received the assent of the taxed,
or of their representatives in Parliament. The other is the fidelity
with which, at any rate since 1G88, we have recognised the binding
and (mduring obligation of the debts we have contracted. These
circumstances obtain, as they deserve, the praise of M. Martin,
who nevertheless feels some apprehension, as beconuis perhaps
a believer in free trade, such as we suppose' him to be, that that
simplicity of our customs tariff, which also stirs his admiration,
and, indeed, excites his envy, will possibly not he preserved intact
in the future. To the two causes, however, mentioned abo^^^
the success of our financial evolution is ascribed by him.
Whether M. Martin he correct or not in the peculiar stress thus
laid on these conditions alone, then' can he little doubt that he
has succeeded in willing a story which is at oJice n^adahle and
informing. The remarks, indeed, of an acul(' judicial mind Kke
his, which can bring the sym|>athetic detacdimcnt of an
('xternal witness to hear upon the stiuly and inh*rpretation of
English events witli their ant(‘cf'den(s, o*‘ foices and the conse-*
qiiences in which they issue., nmst always he of int/Tcst, and may
often ])rove of use, to English rea.d(;rs. In that office our f>resent
author has, we think, both in this and his previous work, attained
a great measure of success.

But W('. go further ; for we are confidenl that we c‘-an affirm, with-
out fear of contradiction fi'om English students, that he has done
more than achicive this important result . I Lis hook bids fair to take
its place in that class of valuable contriliiitions to the elucidation
of English economic liistory for which we have of late been more
than once indi'lded to the compedent and ctireffil beaming of
French writers. Like M. Mantoux’s Industrial llciolution, it
merits, as it will reward, the close, alert perusal of English
economic, teachei’s, who will find in it what they cannot, we think,
discover in sucli a shape elsew here. 'As the area which M. Martin
embraces is inych more extensive, thr igns of new research are
not perhaps so manifest on his pages as they are in M. Mantoux's
monograph ; but he has by no means limited his investigations to
those recognised general histories to wffiich he pays a due meed

1913] MABTIN: HtSTOIBB PINANCifeBB DB L’ANQLETBBBE 411

of a/‘knowledgiiient. tde has examined also the first-hand
evidence contained in a d oca i men t ary form in a number of otficial
publications, and he has known how to utilise these original
sources with discrimination and eflVct. So far as we have
been able to test his writing, he has produced a narrative which
is not only lucid and pleasing, but is also trustwortliy and
antlioritative.

The general ])lan of his treatise, dividing liis account into three
main periods, the first stretcliing from Magna Carta to lf)88,
the second extending from the I\evolution of that year to the
Reform Bill of 183J, and the third and last comprising the con-
cluding seventy years from to BU)‘2, is, we think, happily

conceived ; and detailed execution of the scheme in eacli
successive sectioTi lias bf'eii accomplished with c‘orresponding care
and ability. The tale is sul'lichuitly suppliial, but is not, over-
bui'dened, with thf‘ illustrative facts and figures given: and the
drift and purpose are made clear without, any undue })ressing of
pa,rticiila.r individual views. ^Vo select ex.arnples, the treatment
of the Debt, winch rises into prominence in the s(;cond part, and
th(‘ handling of (lie income tax, wliich is conspicuous in the third,
are at once judicious and suggestive. M. Martin evidently knows
how to secure and retain tlie interested attention of his readers.

Accordingly, w(‘ believe that in existing circumstances /lis book
may be said to till wortliily a conspicuous gap. As he remarks,
Dowell’s 11 isfonj of Ta.vaiiov and TaxcR hi England was published
a (|uartei' of a c(‘nturv ago, and is out of print : and Mr.
Sydney Buxton’s Finance and Politics (to which, liowever, we
ha,ve not found a nderence in M. Martin’s footnotes) deals only
with the single c^cntury from 1783 to 1885. The accounts of Eng-
lish financial evolution contained in F. W. Maitland’s fiost humous
(hinstitutiorial Jlistorij oj| Fjiigland (to which also there is no
allusion in the present work) must be considered to be scattered
and fragmentary, though they are too in a sense, perhaps, the
most connected and consistent, and the most stimulating and
illuminative, wdiich have been hitherto available. Students have
Iherefon^ been compelled either to collect for tluunselves dtd.ached
passages from those general economic histories to which M. Martin
recognises his own debt , or laboriously to piec(^ tog(dher separate
episodes or chapters of financi«n history, such as ihostJ marked by
Gladstone’s famous Budget s|>eeches of 1853 and 1800, or the
desci'iptions of particma* taxes, like that furnished two years ago
by Professor Seligman’s brilliant investigation of the English
income tax in his admirable study of that fiscal instrument.

F p 2

412 ‘ THE ECONOMIC JOURNAL fsEPT.

tJow M. Martin has attempted and achieved the work of com-
pilation which was needed, and we offer him our hearty thanks.

L. L. PRfCE

The Economic Utilization of History and other Economic
Stinlies, By Henry W. Parnam. (New Haven : Yale
University T'ress. J913. Pp. viii + 220.)

Into this “little volume,” as it is described by the author, no
sTTiall amount of stimulating suggestion has been introduced.
Professor Parnam ’s Studies were published separately, but
“represent one point of view”; and the last nine of the dozen
chapters‘of wliich the brochure consists are an “application” to
labour legislation, to business organisation, and to charity, of the
“scientific methods” advocated in the opening three. What,
then, are those methods? They are, in effect, according to the
title of the essay, the “utilisation of history” by the‘ trained
economist. ]f is in this way tliat the Yale j)rofe8Sor holds that
the “exp6iri mental method” approved and recommended by some
economic wribu's of gnnit fanu' in the past lil:e Jevons can be
most fittingl}' and most a(lvantag(*ously employed. Tlie special
vahu' of his own fresh treatment of this theme consists in the ilhi-
minatin^j skill with which he dcanonsl rates flu* possibilities
afforded in peculiar measure ])y the particular (onditioim of the
United States foj the scientific use of this potent instrument of
economic study. Experiments are now\ as they have be^en,
coniiniially made for tlie benefit of tlie economist; but mere
observation oi* bare description is not enough for his purpose.
Analysis is needed. The great importance, however, of ecr»nomic
interests in the history of America, the free play given there to
economic forces, and the diversity introduced by the varying
practices of the several States of which the (mminonwealtb is
composed, render that country a very favoura])le splien* for the
a})plication of the method as the professor conceives it. The
experiments have happened within a limited period, of time; they
have been (‘onducted in a circumscribiMi area of space, and they
have concerned a homogeneous people. EoriKsequently, the
essential condition for success of “other things remaining the
same” may be considered to hold good. History, then. Professor
Farnam would regard instTuctively from this standpoint as an
economic laborn’lory, and here he W'ould even find a wholesome
corrective for the facile dilettantism whiefi may have been brought
recently into economic! study through its new popularity. The
application of the principles thus established at the outset is

1919] LEVY : GBUNDLAGEN BBS OKONOMISCHBN LIBERAHSMUS 413

madr no less happily in the succeeding chapters ; and on every
page, or nearly every page, Professor Farnani stirs our flagging
notice by some linninous apcn^n or sets ns thinking by sonu^
stimulating comment. We have read of late few books wliich
yield so ample a reward for their perusal.

L. Ij. Prick

Die Grundlagen dcs uhotioimschen Libcralisiniis in drr
(icschichte drr rngliMchni VoJksirirlschafi.^ Hy J )R.
Hermann Pevy. (dona: (lustav .Fischer. J01.‘J. Pp.

vii + 96. Price M. 3.50.)

The title of this book does not rtM-dilv indicate th(» scope of
its en(|uiry. l^hr ^ jih^nnlisinus that Prof. Levy has m view is
not to be confused with the progtamnu* of any political party in
the present or with the. teachings of the Manchester Sc'hool of
Economists at the In ginning of t.h(‘ niiud.i'cnth c(‘n(ury. On the
contrary, th(' hook aims a.t opeming up that jKuiod of PnglivOi
history which may be described as a period of industrial pns
[laration and probation, namely, the scwentiumth century, witli its
civil wars and revolutions which translonned Stat(‘, diurch, and
So 9 ie.ty. It was in these tinu's that ilu' (diaracter of tiu nation
formed itself. With the ac(piisition of civil and |K)htjcal lihiuty
the nation not only shakes off the hd.ters of the huidal tinu's, hut
breathes another spirit, and has a new^ ])hilosopliic'(‘(*(moniic out-
look on life. But for the acJiU‘.vements of this (U'ntuiy, Prof.
Levy doubts if the way would have lu'cn paved foi- the suhsi'cjuent
economic development of the (dghteent.h and the niLud-eemth i*en-
turies, wliich secured to England industrial sufiremacy wlum
other nations were grap}>ling with problems which slie had solved
in the struggles of the siwcnh'eiith c.entury. fhof. Levy hiings
out the main facts clearly, and is al)le to show (h(‘ Ix’aring, whudi
such liberal measures as free immigration of perscuailed forc'ign
Protestants and Jews and the proclamation of tolerancrcy had on
English industrial development.

The book is useful in so far as it directs attention to thovse
questions, but it may be doubted if all the Grnndkifjf n of English
economic Liberalismus lie exclusively in tiiis century. By singling
it out, he is laying himself op(’n to the same kind of mistake as
that against w^hich he specially w\arns us, namely, the mistalo^
of thinking that the Industrial Kevolution in England began w ith

^ Since the above rt^view was written, this book has been translated into English
under the title Economic Liberalism^ and published by Messrs. Macmillan, price
Is. 6(2. net.

414.

THE ECONOMIC JOURNAL

[sept.

the invention of new machines and appliances. Surely an account
to be thoroughly philosophic should take into consideration not
only the incidents of a particular |)criod of time, but all the peculiar
circumstances of England, and, above all, the character of her
people. That character was not wholly formed in the seventeenth
century, though some features of it were intensitied, as Pfof,
Levy fx^ints out with rather over-emphasis, in the case of the
Ihiritans. However, this part of the book is suggestive and
illuminating.

Printed words die hard, and the views of soirie of the hasty
and dogmatic parasites of Adam Smith and his followers receive^
some notice here — how they transformed a part of Cultur-
1 jiberalisnujs into soruething that was not any more a matter of
feeling, a thing that w^as part and parcel of the individual, but was
rather a science, whose law\s held Iriie for all times and all slages
of development wiih the rigidity and accuracy of matlu'matics.
What, says the author, is one to think of such men and their
so-called science when neo-Mercantilism and Socialism flourish
so lustily to-day?

In the concluding pojtion of his book Prof. Levy shows the
England of to-day by way of contrast with the Individualistic
England whos('> beginnings lie in the seventc'enth ('entury. The
country .'s swaying away from extreme Jndividualisni to forms
of social, collective action, wdiich are making it a Socici! State;
in tact, a Bureaucratic State. Is not the treud oT rt'cent social
h'gislation altogether dillerent in its conception of the ])rinciples,
aims, and objects of the State from that which has hitlierto guided
it for the last three hundred years? Has not (he scope of the
economic functions of Government, been widened, n(‘-c(*-ssitat.ing
th(i perfection and dev('lopment oi its machiiuuy and bringing
into prominence the Oflicial, who is the central tigme \n the
Bureaucratic countries of Europe? On the note of these cpiestions
the author concludes. IVrhaps he has taken, sometimes, the
words of politicians too seriously. L. Iv. Hvdeh

An Economic Interpretation of the Constitution of the United
States. By Cpiarles A. Beard, Associate Professor of Politics
in Columbia University. (New York : The Macmillan
Company, 1913.)

Much might be said about this book.^r Eor one thing it is an
important sign of national and academic movements now
stirring in America that a Professor of Politics should essay an

1913J BEAED: CONSTITUTION OP UNITED STATES

416

economic interpretation of the Constitution. The author claims,
and juay justly claim, that he has made a survey of the constitu-
tion-making forces at work in 1787 from an entirely novel point
of view. Not a word about Montesquieu, not a word about
borrowing the substance and avoiding the idiosyncrasies of the
British Constitution. Nor is this to be regretted. What may
be called the idealistic methods of intei'pretation have too long
had the field to themselves. Blackstone, once not merely
an historical figure in English jurisprudence, gav(* place
more than a generation ago to more realistic exponents of the
British Constitution. The change in America has been longer
delayed. If we may judge by Professor [kxird’s booh, it is likely
to be more thoroughgoing.

The raiionnJi tlie book lies in the two propositions : (1)
“The Constitution essentially an economic document based
upon the concept that the fundamental rights of property are
anterior to goveiiiuient and norally beyond tlio reach of popular
majorities”; and pJ) “ib('. (Constitution v’as the work of a con-
solidated grouf) wliose interests knew no State boundaries and
were truly national in their scope.” It is on the whole admirably
planned, fair and moderate in statement, and, within certain
limits, convincing. Ih'ofcssor Beard carries tlie economic* inter-
pretation of society further than most ('conoriiists would care to
do. Too much emphasis is put on the temporary ^economic
interests of the moment. Idie (k>nstitiition was not t.lie work of
abstract publicists creating fx)liti(*.al society in raevo, but their
work has lasted for more than a century with few amendments,
in spite of the most far-reaching social and economic changes.
It is well t.o be reminded again that Whig principles were not
the monopoly of the English aristocracy, and that in certain of
their implications they were shared by thinking men everywhere,
and could be engrafted on a republic as v\ell as on a monarchy.
But Whig doctrines were not exclusively economic. If property
required to be specially safeguarded, so did personal freedom,
religions liberty, and other “rights.” (Compare Story’s judgment
in the famous case of Wilkinson v. Eeland : “The fundamental
maxims of a free government seem to require that the rights of
personal liberty and private property should be held sacred.”)
It is not enough, it is not a very satisfactory method of proof
(see Professor Beard’s fifth chaf)tor), to make Franklin, Hamilton,
Washington, and the other framers of the Constitution stand and
deliver their pass-boous afier the modern style. Their invest-
ments, whether in land or personalty, are of subordinate imixirt-

41fi THE ECONOMIC JOTJENAIi [SEPT.

ance compared with the effect on them of the intellectual and
political atmosphere of their times.

Many interesting questions are incidentally raised which Pro-
fessor Beard may subsequently attempt to solve. What was the
size of the landless wage-earning class in America at the Revolu-
tion? Does he not over-estimate the extent of the manufacturing
interest in 1787? And, if llie anti-Fcderal tendencies had won
the day, would not their victory have been very sliort-lived?

W. H. Pringle

Tcas* }e Salairr By BARTHfUjEMY Raynaud, Pro-

fesseur a la faculte de droit de TUniversite d’ Aix-Marseille.
(Paris: Recueil Sirey. Pp. xi + 5i8. Price 12 fr. 50.)

Much water has flowed beneath the bridges of the Seine since
the tune wdien,, in response to the plea, 11 jani hien qnc je I'wc,**
statesmen and ])hiloso{)hers could quote with (‘qnanirnity , or even
wdth aj)provai, the retort, “Jc n’e?? rois pas la ncccssifr.''
Changes in industrial conditions, in the conception of State func-
tions a,nd organisation, and in the political centre of gravity, have
given rise to the idea tliat society should in some measure secure
to its ineinbers a rnininuim standard of life. From this idea has
developed the claim for a minimum wage; and with this cladii,
and its priictical realisation, M. Raynaud's book is concermd.
After considering the ethical, juristic-, and econoiiiic*- theories
which seek to justify the ideal of the minimum wage, t.he author
describes in detail the extent to wFich tliis idt^al has befui u aiised
and the methods used, concluding with a statement and criticisiu
of cun'ent objections to the minimum wage, an analysis of tl.e
forces making for its attainment, and an exposition of the funda-
mental and necessary conditions for success.

It is remarkable l-hat a. claim so widespread as that for thc
mininium w^age should rest upon such a narrow thi-oretical basis.
The driving force of the movement certainly does noi. jiroceed irom
the theoretical views considered by M. Raynaud — that of Roman
Catholicism as efutomised in the bull Hcrnm No't'>aryni, of
Socialism as expounded by St. Simon and Dr. P>Tenger, and of
“Social Utilitarianism” lepresented by Mr. Sidney Webb. The
explanation of this difficulty is suggested, but not developed, later
in the book. The movement for a minimum wage had its origin
in a strong but in^'oherent feeling among^ w^jrkpeople that it is
unjust for wages to be so low as not to allow a man to live and
support his family. Then “the theorists came upon the scene,

1913]

RAYNAUD; VERS LB SALAIRE MINIMUM

417

and sought to state with precision what may be called in Sorel’s
phrase, the ‘ myth ’ of the mmimiim wage.” It is much to be
regretted that M. Eaynaud did not give more prominence to this
^suggestion. As the book stands, existing schemes and legislation
seem to have no relation to men’s opinions. No adequate explana-
tion is given of why and how the movement towards a minimum
wage has taken its past course and achieved its present position.
Yet not only the importance of the movement, but its very form,
are largely due to the development of working-class opinion. For
example, the abandonment in 1893 of the miners’ demand for
profit-sharing by means of a sliding vscale, in favour of the claim
for a living wage, was the effect and cause of important changes in
working-class views, and has deeply affected subsequent legisla-
tion ; and the nr-gress in Great Britain and the Colonies, com-
pared with that fui the (’onfinent, towards some form of minimum
wage, is pi'obahjy in pari- due to the opportunist character of th('.
English laboui inovement under the influence of trade union
ideals. The more'^logically complete programmes of the French
and German Socialist organisations do not give great prominence
to the n>injm\ixti wage, which is but one of many demands.

M. Kaynaud's description of the existing machinery for tlie
realisation of the minimum wage is detailed, accurate, and lucid,
with ample reference to authority. Two main views hold the
field. First, that no employer should be allowed to pay 'less than
a wage which would secure to the workman the necessaries of life.
This may be called the “subsistence” minimum. Second, that
the w^age paid in return for a given amount of work should not [all
below a certain minimum level. This may be called the “fair
w^ages” minimum, the establishment of which M. Kaynaud
regards as the principal function of the bargain between organised
workpeople and employers. On the basis of the collective bargain
rest other methods of attaining the same object. The fair wages
clause in Government and municipal contracts imposes the obliga-
tion to pay the wages normally paid by “good” employers in the
particular industry concerned ; the law in Germany and Switzer-
land which allows labour contracts to be annulled on the ground
that they are “harsh and unconscionable” has in view the w^eak
bargaining power of the individual workman ; and the work of
trade boards and arbitration courts is largely intended to prevent
payment of a lower rate of wages than are in fact paid by “good ”
employers, or would be paid were the wwkpeople organised. All
these methods of regulating wages are directed towards securing
a “fair” equivalence between wages and work done, in the

418

THE ECONOMIC JOT7BNAL

[sept.

absence or impotence of a trade union. This aspect of the
minimum wage is clearly shown in M. Raynaud’s discussion of
English legislation. The prime characteristic of the machinery set
up by the Trade Boards Act M. Raynaud holds to be thaijb it is
“supplementary and complemeniary to private initiative. It
possesses as little as j> 08 sible the character of an obligatory and
compulsory law — elle propose plus qu'clie impose,'' In the
author’s opinion the working of the Act has been beneficial, for
“though it may be premature to assert, save in the case of the
chain-making indnstry, that there has been a general rise in
wages, it is at least possible in face of the movement towards
grouping and association which the Act has inspired, to ascribe to
it an imjTortant and valuable success, a. probable guarantee (^f final
succe‘,ss.“ In his brief discussion of the Coal Mines (1012) Act,
M. Raynaud again emphasises that the machinery set uj) rests on
the basis of conciliation and consent; but by nt'glecting the dis-
tinction fiointed out by Professor Pigou lietweePj, th(' two types of
“fair wages” niiniinum, one of which seeks to ecpialise the
efficieiiey wag(‘s paid to different people at the same time, and
the other to e(jualise the efficiency wages paid to ihe same peoph'
at different times, M. Raynaud fails to mark an important differ-
ence in the character of the Trade Ikiards of the 1009 Act, and
the Distrud Boards of the 1912 Act.

Though existing machinery and legislation is uiainJy (breez'd
towards securing the “fair wages” minimum, the eoTu*e]>tion of
tlie “ suhsistcUKU' ” minimum lias, neverllu less, had eonsidcuabk'
influence, notably in the case of tlie w\ages of State employees, and
tlie decisions of the Australasian Arbitration Pourts. To the
latter, however, M. Raynaud pays little attention. ^J^his is a
serious omission, fur the work of the Australasian ('ourts is at
present the only exam[)le of direct and far-reaching control of
w^ages by the. State, and study of their judgments would fijrow’
much liglit on the difficulties of such control and ways of meeting
them. In New^ Zealand ihe tendency has been to reject the idea
of fixing wages on a profft-sharing basis, and to base the decision
of the court on the cost of living, the nature of the work, and the
ability ol the employer to pay the wages claimed. The policy of
the (Joiuinonwanilth arbitration tribunal, however, as declared by
Mr. Justi(*.e Higgins, regards a minimum w^age based on the cost
of living as sacrosanct, and refuses to take into considiaation the
fact that payment of such a wage may cause the empJeycT to close
his works.

In the concluding part of his book M. Raynaud writes as a

1913]

BAYNAUD : VERS LE SALAIRE MINIMUM

419

convinced supporter of the minimum wage. He fully realises,
however, the serious difiiculties which are likely to he encountered,'
and refuses to entertain as an ideal the establishment of the sub-
sistence rainiimim, on the ground that it is ditiicult to ascertain
what this minimum should he, and that its enforcement would
often drive employers out of business. M. Kaynaud, therefore,
pins his faith to the ideal of the “fair wages” minimum, the
extensive realisation of which depends u])on the growth of collec-
tive bargaining between employers and employed, the function of
the law being to facilitate the making and enforcement of collec-
tive agreements, and to supfilement th(‘ni where necessary by the
establishment of Trade Tioards. To those who accept the present
basis of society as desirable and likidy to continue, M. Ivyynaud's
views will recomnumd theniscdvc^s. Jhil io the ima'cusing numbers
who belii've in no n nied^ !‘or socinl ills but social reconstruction,
M. Eaynaud’s con(‘<‘ption of a minimum wage wilj appear an aim
of but doubtful vujue : and it is likely, therefore, that under their
influence, future action will look moie and more towards the
(‘stahlishment of a subsistence minimum as a first step towards
commurdsm.^

M. liaynaiid’s treatment of the objections io the minimum
wage as a means of social bet termcnl is by no means convincing.
Against some of the more obvious criticisms, sucli as the Jikelibood
of evasion and the hardsliip upon the old and intirin, M. liaynaud
makes a good case. TUd he does not state or meet the capital
objection that the establishment of a ininimiini wage, by changing
the direction in which productive resources are applied, may lead
to a diminution in tlie National Dividend, which may directly
injure the working classes. If it he assumed, as INI. Kaynaud
tends to assume, that tlie establishment of a minimum wage
would merely result in a transference of wealth from em])loyer to
employed, and at tlu* same time cviui increase the workmairs
efficiency, the objection falls to the ground. But (besc assump-
tions will by no means always be justified, and when they are not
the results of the minimum wage may be worse than the evils it is
designed to cure. This is no argument against the application of
the minimum wage in particular cases, but it seems conclusive
against regarding the minimum wage as an infallible and universal
remedy for all social ills.

W. G. Constable

420

THE ifecONOMlC .TOEBNAE ''

r>yndkaUitm and the Co-operative. Commonwealth. (Ho4 we
shall bring about the Berolution.) By Em|LE Patattd and
Emile Podobt : translafed by Chablottb and Febdeiuck
Charles. (Oxford : The New Iniernational Publishing
Company.)

To those fati^oied wiih the niyiholo^es of M. Sorel, this is
in many ways n refreshing book. At last we are told with sqjqpe
approach to definiteness what two, at. least, of those who profess
and call thninselves Syndicalists really do want, and how they
f>ropfise to get il. It is not, indeed, clear how far the authors’
opinions are to be considered represent at ive. The translators
content ^themselves with a. mild protest against the description of
the sutfnige niovcnnent as a childish hobby, and the authors’ too
ready accejd/ance o( the latest medical fad of senim tn'atment;
but lorn Mavn and “grand old comrade Kropotkin,” both of
whom c.ontrihute forewords, appear to reserve' he right to differ
on more important joints; and Will J)yson, who contributes the
rather flamhoyji nt. drawings, has clearly dreamt dreams and seen
visions on his own.

The first i)art of the book, written in a staccato and melo-
dramatic narrative stylo which recalls Mr. Guy Thorne's WItrv

was ljarh\ describes the mc'clianism of the Revolution. ^.I'he
most interesting point is ilu', stress justly laid on t^'e importance
of caj)turing the army and the instruments of wai . Tlie cuthors,
indeed, are at sonu^ pains to conceal tht' si'K'ida! efl’o^ds of the
genera,! strike per sr : from the description of tlu^ “spiking ” ot
the ovens on p. i2'2 one would suppose that, only the <*apita!ist
class <u.)nsum(‘d bread, and th(‘ only serious etforts to avert
harmful n^actions u|M»n the worker vS(‘em to have beem made by
the dustmen, who conthiued to clean the stri'cts in the working*
class districts. Rut the authors are, nevertheless, alive to ^hc
truth that it is only by a rapid and forcible capture of the
a.ccumu]a,ted stocks in the hands of the capitalists that the
RUpenaor starving power of the latter can be overcome.

The sec'ond portion of the book, dealing wdth the subsequent
teconstruciion of society, is considerably the more interesting.

^ The manageuKUit of each trade, as we know, is to be in the hands
' of the trade union. In this connection one cannot refrain from
’i^oting the naive tributes paid here and there to the effete and idle
hourgeoisie, deserters from whom “came oycr^quite frankly to the
Revolution” and put their “knowledge and experience” at its
disposal j and in whose offices numbers of “valuable documents

- 19 ^] PATAUD ANDJpOUGET ! SYNDICALISM 421

and important statistics ” were discovered and made use of by the
, Syndicates.

But the instruments of production, though managed, are not
apparently in any sense to be owned by the workers in the trade.
The system of distribution proposed is one of pure Communism
ior articles of necessity, including railway transport and house-
room, combined with an equal remuneration in “labour-notes”
Wbe used in payment for articles of comparative luxury. It is
left entirely to the syndicates in the luxmlous trades to change
their occupations in accordance with the movements of demand
as evidenced by the use of these notes. It is gratifying to learn
that the goldsmiths and the jewellers set a good example in this
respect, but one 1 x)lvs in vain for a guarantee that it will be
followed.

Each trade is to be allowed a blank order on the trades making
the insiruinentM ot production — a system wdiich* seems hardly
likely to coiKhice'^. economy of management. As to agriculture,
the large farms aic to b{‘ organised at onc^e on a Syndicalist basis,
while the peasani pro|»rietors are to be converted gradually through
the half-way house of co-operative institutions.

Co-ordination is to be secured by the local Bureaux de Travail,
the Trade I^ederations, and the EV,d(Tal Commit! e(’, ('onsisting of
delegates from both. 'Pheir wwk is “not direction, but (\:)ndensa-
tion and analysis,” and they^ wdeld no power in the interests of
consumers against a refractory syndicate. One cannot repress a
vision of a distracted Ijabour Exchange telephoning to Mr. Sidney
Webb i6 send owr a competent bureaucrat to put an end to the
reign of industrial anarchy.

The concluding chapters deal with the social asj)ects of the
new Utopia. The most pleasing leature is the prosperity of
amateur theatricals, and the most curious the new penal code,
which combines lynch-law for the offence of rape with a. moral
boycott for all other known forms of crime.

J have said that this is a refreshing book, but it is also a dis-
appointing one. It is redolent of the central fallacy of Syndi-
calism-*^that oblivion of the standpoint of the consumer which is
at the bottom of tlie worst excesses alike of trade unionism and
of capitalism. Bui the one solid common-sense contribution
which we had supposed that Syndicalism offered to the solution
of the industrial problem seems to have vanished — the suggestion
of the possibility of«a restoration to the manual workers of a sense
of personal ownership in the means of production, and of direct
financial interest in and responsibility for the prosperity of theix^^

422

THB ECONOMIC JOUBNAL

(sept.

own trade. We arc lefl. witli a rcchnvfjc of the visions of early
l^nglish Socialisni, e.xhilarating, like all fine visions, to the
imagination, but leaving the reason distrustful and unconvinced.

D. H. Eobebtson

he Droit Jritrrnafional Ovrricr. By Ernest Mahaim. (Paris ,•#
Eecueil Rirey. 191 B. 38.5 pp. Pi'ice G francs.)

j\’mw inventions nc^eessitate new laws. The modern develop-
ment of international life has resulted in tlie appearance of a
new branch of international law (le droit international onvrier).
This was the subject chosem by Troh'ssor Mahaim for a course of
lecture.s/to studemts at the Rorbonne, which have now appeared
somewhat, amplified in book form. Professor Mahaim covers the
ground very thoroughly. He finds it (convenient to divide tlie
Bubji'ct into thro(' parts. 'Fhe first, dtnils with the settleuKmt of
work(‘rs in foreign (countries, both from the ]){.vmt of view of the
attitude of the law towards foreign persons wishing to immigrate,
and inversely as regards the altitude of a State towards its subjects
abroad. In the second part he considers tlu' position of foreign(*rs
under the various branches of labour l(*gislation. Of these by
far th(^ most important from the standpoint of international lav
are tlie insurance and com])ensation laws, which sliow g»‘eai
variety iu their treatment of the rights and dutii^s of pcasons of
foreign nationality employed tem[>orarily or [xu m lucntly w ithin
their resp(‘ctivt:‘ sfiheres of ofieration. Thes(‘ laws illu urate most
strikingly the infliumce of modern legislation on international
relations. Th(:^ (‘onntries ennrrerned have found it n(‘(‘essary to
conclud(' a whole series of treati(»s relative esjiecially to aceirlen^
insurance ; the texts of most of these ai’e printed in an app(‘ndix.
In the third ])art we caune to labour treaties proper, i.r., conven-
tions by wliich t.wo or more States definitely pledge themselves
to introduce laws of a particular type, not so much in the interests
of the sut)j('(!ts of any other States within their territorifv^, but
g(mei*a.lly for tlu' benefit of all workers, and especially in (>rder to
avoid iiua]iialitv in commercial intcuvsts. We note, by tlie way,
that lh\)lV‘ssor Mahaim denies that these latter interests are at
stake. Pie maintahis that industrial legislation is ec.onuinically
profitable from the ]>oint of view of tlu' individual manufac turer
as well as of a nation at large. It is* elcxirly impossible to give a
general reply to <be rniieb disputed cjjuestion of how far a high
standard of wages and conditions is an economic advantage — too
much depcu’Js u[)on local cioiiditions, the skill and cajiacity of the
individual employer, and his pov\er to turn temjxirarily increased

1913]

ROBINSON : THE SPIRIT OP ASSOCIATION

423

outlay to advantage in the long run. But Professor Mahaira
seems rather to cut the ground away from the conventions in
question by merely leaving them the purpose of consolidating and
fortifying the laws of the different countries. The main object of
the book is, however, to instruct on the history of this new
alevelopment in international law and on its present position.
Incidentally, considerable light is thrown on the very interesting
Ff|inco-Italian Treaty of 1904 and its later supplements. Here,
indeed, we do seem to have a case of one Government strengthen-
ing the hands of another in developing and enforcing its indus-
trial law by undertaking to make, in return, certain concessions
in the way of protecting its subjects from exploitation, professor
MahaiiiS^ gives a lucid description of this very reniai’kabld' treaty,
which w'as the lirst of ils kind, and still remains in most respects
unique.

So many fresh projiosala for international kibour conven-
tions have b(*en^ nought, forward recumtly, tliat this general
survey of tlu^ prt^sent [)osition comes appropriately. If we are
tempted to regret that Professor Mahnini does not tliscuss more
fully the economic asf)ect of these conventions, we must remember
that the book does not [)re(end to be a complete and reasoned
treatise.

S. Hanokr

The Spirit of Association, being some account of (he Gilds,
Friendly Societies, Co-operative Movement, and Trade
Unions of Great Britain. By M. Pothergill Pobinson.
(London: John Murray. 1913. Pp. xH“d63.)

This fresh conspectus of the four great movements of asso-
ciated effort which have contributed to cause the notable advance
produced in the condition of the working population of this
country is ()p|)ortunely published at the present juncture ; and it
may, wo think, continue to fulfil a useful purpose in the futures
The book does not, indeed, pretend to be either original or
exhaustive, for the writer adheres to tlu^ “more beaten tracks”
oi* exposition. Those who demand a minute detailed familiarity
with any one of the four manifestations of the “ spirit of associa-
tion ” here exhibited in outline will doubtless consult the authori-
ties employed for this summary review. But they will lind that
those sources have been ascertained and explored with observant
thoroughness. They will commend the discriminating judgment
brought to bear upon the survey, and the form in which the

424

THE BOONOMIO JOtTBNAL

[sept.

r^salts are presentee] is not only adequate for the end in view,
but is also in itself attractive. From ra^dijrval gild to modern
tirade union the interested reader is led on with a sure and
dexterous liand. He is acquainted with the outstanding features
of the past and the present of the typical friendly societies, and
he learns the various distinctive phases contemplated or realised^
of co-operation and co-partnership. He is not offered startling
paradox or tantalised with imaginative conjecture, but is told the
recorded truth in an agreeable and lucid fashion.

And yet, for all its sober exactitude, the story is by no means
unimpressive. Tt possesses, indeed, some of the fascination
the romantic occurrence of the unexpected. We note an amazfng
growth from smah beginnings to large developments. Who could
liave foretold, for instance, the immense possibilities of that,
simple “Hochdale plan,*' which transformed co-operation from its
early disa[)poii*.tments to its assured success? We are reminded
again of tbe illuminating parallel which (tam^»^e established be-
tween the gilds and the trade unions in the combination of
individual self-sacrifice with class-selfishness, although the
“craftsman” of the Middle Ages was as much a master as he
was a workman, and was more identical with than hostile to those
“merchants” whose societies ca,me before his own. Even tbe
“journeymen fraternities,” on which, as author shows, fresh
instructive light has recently been shed, seem io have been
brought more or less compltdely under the r’.ontrolling im'iUence
of owners of capital, and did not wholly reprvsent, or consist of,
hired wage-earners smarting from a sense of crushing oppn'ssion
and lifelong dejiendence. Tlu* great friendly societies, lastly, in
their turn, retained to our own day the bright trappings of j ic-
tiiresque (teremonial and of quaint details of dress which link
them with the past, and the very name of one large “ordej ”
shows tlie association with unmistakable emphasis.

Jn their connection especially we share the regret expiessed
by the writer (jf this hook at the modern encroachment of State
officialdom on the province of the voluntary effort therein
described. Some acaite and informed historians indeed,, trade
unions have given their ('ordial welcome to the increasing tendency
which is evid(U)t to invoke tlie strong arm of legislative^ compulsion
in the promotion of their aims. But to other observers a most
8ignifir*aiit and nu'st ominous incident of the immediate' moment
is the rapid conversion of the friendly societies, into virtufil govern-
ment departments by the coercive stress of the Insurance Act.
With this faithful moving narrative before us of the work done

1913] DISTEIBUTION OF INCOMES IN THE UNITBI) STATES ^ 426

by the “spirit of association” in the past, we feel considerable
misgiving of the future,^ and we doubt whether the changes now
being wrought before our eyes will be pronounced beneficial when
the final balance can be struck between loss and gain. It is
certain that the willing unpaid work by which these great monu-
ments of voluntary effort have been raised, and were, hitherto,
supported, will not be readily, if it can be satisfactorily, replaced
by the costly multiplying “red-tape” of professional bureaucrats
with their uniform rules and their inelastic methods. Already
the destruction and its attendant loss are more manifest than the
^ain M^hich may possibly accrue in the end from the new con-
struction so precipitately designed, so hastily begui., so peremp-
torily pushed on, and so noisily and extravagantly praised.
Already that fresh building has urgently required repair, resting,
it would seem, on an insecure foundation.

I^. L. Price

The Distribution oj Incomes in the United States, By Frank
Hatch Streightoff, M.A. (New York : Columbia Uni-
versity. 1912. 8vo. Pp. 171.)

This study is directed principally to showing the complete
inadequacy of the statistics of the United States to answer any
of the more important questions which the legislator or the
economist would naturally put as to the amount, distribution,
or ratg of change of incomes or wages. There have been several
well-designed investigations as to rates of wages m individual
, States and a few more comprehensive enquiries ; but the author
shows by careful analysis that every one of these breaks down
when a definite and general statement is attempted. After an
exhaustive survey of the more recent wage statistics we arrive at
the following summary of the single conclusion (affecting the
whole of the United States) which they can be made to support,
and it is evident from the data that even this is a bold approxi-
mation : “In view of this consideration, and of the general
harmony of the statistics presented in this chapter, it is reason-
able to believe that, in 1904, something over sixty per cent, of
the males at least sixteen years of age, employed in manufac-
turing, mining, trade, transportation, and a few other occupa-
tions associated with industrial life, were earning less than $626
per annum, about thirty per cent, were receiving $626 but under
$1044, and perhaps, ten per cent, enjoyed labor incomes of at
least $1000. If to these the agriculturists are added, sixty-five
per cent, fall in the lowest earnings group, twenty-seven in the
No. 91. — VOL. XXIII. G G

426 THE ECONOMIC) JOURNAL [SEPT.

medium, and eight in the high. Suppose all the men engaged in
gainful occupations in 1904, but unaccounted for in this estimate,
to have been paid $12 per week or more. This is manifestly
impossible, yet, even upon such anr assumption, fully one-half
of the adult males engaged in remunerative labor were rewarded
in that year with less than $620” (p. 139). Put otherwise, the
median wage in 1904 in U.S.A. was less than $12 per week;
against this we may say with more definite evidence that the
median weekly wage at the same date in the United Kingdom
was rather below $7. The author finds no sufficient data for
the last nine years, but after reviewing the evidence he con-
cludes that there is no ground for the prevalent belief that in
U.S.A. 'tliere has been a large increase of wages since 1890, and
whatever increase there may have been has been offset by rising
prices.

When we^turn to income arising from property we are still
more at sea. “A triple conclusion is, therefore, confirmed at
every turn. First, that the number of individuals enjoying
incomes from capital is unknown, though large; second, that the
total national income from capital cannot be accurately deter-
mined ; third, that as a consequence, it is fidile to attempt to
describe, in any way definite enough to be valuable, the dislii
bution of incomes from property in the United States” (p. 150).

Mr. Streightoff hopes that this deficiency of statistif s will hr
realised, and that efforts will be made to wAr it good. H(‘
suggests that at the next census (1) the schedule of tuiquiries as
to agricultural products shall be slightly extended so as (o show
thr aggr('gate product and the aggregate out-goings in each farm ;
and (2) the rental value of their house or tenement shall be asked
from non-agricultural households. (1) would give at -once the
income of the farmer; (2) might be made to indicate incomes if
sufiicient sample enquiries were made to show the relation of
rent to income. We are a little sceptical as to the success of these
enquiries ; tlu' American farmer must keep very niuc.b more
elaborate anti accurate accounts than his i^^nglish contemporary
if the real value ol his activities, of his consumption, sales and
shelter can be found by such simple and universal questions;
while ex[)6rieTice hert' shows that thti relation btitween rent and
income is variable and complex. No doubt the relation could be
learnt if a sample investigation were adequately carried out ; but
this sample enquiry would have to extend over all ihe States and
principal towns, and it would be very difficult to make certain
that the incomes of the households were accurately stated.

1913]

CHAPMAN : ELEMENTABY ECONOMICS

427

Perhaps the author could add to his services in the direction of
improving statistical data by conducting a careful experiment in
this direction.

A. L. Bowley

ElernentaTy Economics. By S. J. Chapman, M.A., M.Com.

/(London : Longmans, Green, and Co. Pp. 1G9. Price
2s. net.)

This little volume of Professor Chapman’s is, in one way, a
very remarkable achievement ; yet it is doubtful whether it was
worth doing. Putting the whole of etionornic theory into P69 small
pages is a feat of the same order as printing the whole of the
Lord’s prayer (m a threepenny piece ; it is very wonderfri and
very useless. Professor Chapman’s task has been accomplished
witli great skill ; there is not a superfluous word in’ the book, and
most of it is extit:''ely lucid and admirably expressed. Needless
to say, tbc‘, theory is strictly orthodox, the earlier chapters might
fairly be described as “potted Marshall,’’ and even the omission
of any acbount of “quasi-rents” is almost certainly due to com-
pression and not to heresy. Indeed, the reader must marvel, not
at what is left out, but at all that is included in the volume; for
he will find a chapter on “ The Purchasing Power of Moxiey ” as
well as an explanation of “Comparative Costs,” and another of
“The Incidence of Taxation.”

Having paid tribute to the ability of the workmanship, one
is entitled to ask : What is the utility or “value in use” of the
product? It is all dry bones. The marvel of compression is
obtained at the cost of omitting every question which contributes
the smallest interest to economic problems. On page 6 we are
told that, “With a view to social progress, it is important to
consider what we ought to regard as wealth. But to consider this
is the province of what is called ethics. Economics is only con-
cerned wdth what people actually regard as wealth at present.”
Similarly, oh page 109, w^e read that, “The economics of distri-
bution does not aim primarily at showing how, by laws of inherit-
ance or otherwise, it is made easier or more difficult to be born
wealthy. It aims primarily at showing why a man’s income from
his invested wealth is what ibis; and why his earnings are what
they are.”

It is by limiting iiL this way the scope of the subject that books
of this kind do infinite harm to economic science. It is painful
to imagine some working-man, thirsting for a better equipment

G G 9

428

THE ECONOMIC JOOENAL

[sept.

lo. tackle and coniprehend the problems of bis time, picking up
this masterly exposition of economics and finding every vital
question shut outside an air-proof door. It is even comical to
picture his expression when, on nearing the end of fhe book, he
is faced by this question (“with Hints for Solution”), “Demon-
strate fully that all labour tends to receive as itjj wages its
marginal worth.”

Professor (Hannan’s shilling Elements of Political Economy,
incomplete and partisan though it is, comes far nearer to supply-
ing the needs of the beginner than does this learned and impartial
collection of all the bynes in the economic skeleton.

Harold Wright

The Economics of Ereryday Life: a First Boole of Economic

Study. J'art I. By T. H. I^knson, M.A. (Cambridge :

The University Press. 1913. Pp. vi 4-168. Price 3.v. net.)

One may say at once that Mr. Penson has been successful in
producing what, in spite of certain blemishes, is an excellent
short text-book, 'fhe science of economics has not succeeded in
producing many good ones, but this is one of the comparatively
few that are- good. One mistake, indeed, Mr. Ptmson, or his pub
lisher, y-ppears to have made in forgetting that a text-book should
be complete in one volume and not run in two, an 1 1 cannot but
thiidi that the policy of having two parts will prove inconvenient
ti) Ins iead(U's. 'fhe jucst'iit one deals with the science down to
the end of the subject of Distribution ; that of Exchange, whi(.‘h
includes Money, hut. not Foreign Trade, being treated after
Production. Part II. will cover Consumption, Taxation, and
Hade Unions and Co-operative Societies.

Mr. Pens<m writen mainly for students in the very earliest
stages of ec<momi{*. study, and his treatment is, consequently, of
the simplest. f\‘rhaps at times it is made almost too easy, but this,
on the whol(\ is a fault on the right side, and some economic text-
books one can call to mind are far too difficult. Mrs Fawcett’s
little book, perhaps, strikes the mean most h*.p|jilv. For
economics is so constituted that, to give the serious student a
real grip of it, he should be provided with something that can
be mastered without difficulty, and is clear enough when mas-
tered to be retained in the memory. That is why, at a later
stage, Mill’s Principles are so admirable an ipstrumeut of economic
study. Real learning of a subject is apt to be retarded if the teach-
ing is made too easy ; and, from the point of view of more serious

1913]

HIGGINSON : TABIPFS AT WOBK

429

students, Mr. Penson is inclined to err in this direction. A great
deal of allowance must be made, however, for the class for whom
he is writing, whilst he is further justified by the very great
need th^bt exists for a work of just this particular kind. The book
has a few minor blemishes. Occasionally, though he is never
verbose, tfie author gives unimportant matters more space than
they deserve, and one or two of his tables and illustrations are a
little coniplicated.

These small defects, however, are outweighed by the book’s
merits. The treatment is clear, lucid, and vivid, and apart
from occasional exceptions noted above, neither too long nor
too short; whilst Mr. Penson is not like some writers, obsessed
by a certain epigr^'m about brevity. He is never brief at the
expense of clearness. He has a considerable gift for definition,
some of his being quite con^plete and yet not a word too
long. He is also very happy in bringing hofne to novices
the real meaning 'f economic terms, by using betbT under-
stood phrases as alternatives to the more, t('(‘hnical expres-
sions. Thus, the “source of income,” “buying and selling,” and
“the individual income,” bring home to the man in the street
what is really involved in Production, Exchange*, and Thstribu-
tion. His illustrations, too, really illustrate, and his tables and
diagrams, which are of a somewhat original kind, are, with a few
exceptions, admirable.

The book is admirably fitted for the u[>per forms of schools,
for those who do not> aim at more than an elementary knowledge,
and for the general I’eader who does not wish to stiidy the subject
seriously but only to get a general view of it.

N. B. Dearlr

Tariffs at Work: an Outline of Practical Tariff Administration ,
with special reference to the United States and Canada. By
John Hedlry Htgginson, B.Sc. (Econ.). (London : P. S.
King and Son. 1913. Pp. xiv-i 136. Price 2s. Gd. net.)

Mr. Higginson, in writing this book, has limited himself
strictly to the attoruf)! to describe and criticise the various forms of
Tariff Administration as they exist at the present time. He de-
scribes clearly and lucidly th^^ different kinds of tariffs that exist ,
and discusses then* merits and defects, dealing with the machinery
they utilise to achieve their object, the difficulties which they
encounter, and the manner in which these are overcome.
Throughout the author avoids the more controversial aspects of

430 THE ECONOMIC JOURNAL fSEPT.

ihe question, and besides being fair and impartial, his book shows
much evidence that he has brought to his study of the subject
w’hat is essentially a cross-bench attitude on this most vexed
problem. This decidedly incTeases its value.

Theof)ening chapter deals wdth the cjuestion of Tariff Systems,
and traces the rise of iho more complicated ones to displace that
of the Single Tariff. The latter is of little importance to-day
and is seldom found exce})t in Free Trade countries, such as
Great Britain. Modern Tariffs have not only to guard the home
market, hut to secure entry on favourable terms into those of
foreign countries. The performance of this double duty is one
of ihe m,ore obvious difficulties in the w^ay of an effective protec-
tive tariff; and the Single Tariff* is not an efficient weapon for
the purpose of achieving the latter objects. Mr. Higginson points
out, however, that both the General and Ton volitional Tariff
System, as found in Germany, and the Maximum and Minimum
System, have attained considerable success in both directions.
The former, which o]>erates by means of commercial treaties
extending over long periods of years, has been the more effective,
and, from the commercial point of view, has the merit of greater
stability. The adofition of the latter in France and the TJnitt*d
States is largely due to political causes. Finally, the Multiple
Ryatem,^as exemplified by Canada, has successfully provided tor
prefc'rential treatment as well as negotiation, and with the growth
of the principle of preference is likely to achieve a more extended
use.

In the short chapter on the Making of a Tariff tlie most
significant parts are the evidence it gives of tiui grow ing speciali-
sation of duties, the reason for which is to be found largely in
the attempt to confine tariff concessions to the country to wdhch
they are given, and of the use of specific duties in such a way as
to equalise the burdens on different grades and qualities of an
article. Ad valorem, duties are, theoretically, loth l>ctte]“ and
fairer, but have serious defects in practice, particularly in leading
to under-valuation and in destroying any certainty in ihejnind of
the importer as to the rate of duty with which he will be charg(‘d.
Commercially and in practice specific duties are preferable, and
by means of specialisation they acapiire many of the merits of
those levied ad valorem. The systt^m, however, to be effective
does require a ve?y large number of separate duties. The whole
question is carefully discusvsed in the third chapter.

The chaj'^ers on Bonded Warehouses and Free I’orts, and on
Drawbacks are perhaps most suggestive as showing the measures

1913] EOBINSON : RAILROAD TAXATION IN MINNESOTA 431

by which modern tariff-makers have provided for the case of the
entrepot trade ; and there is a. chapter on the Prevention of
Smuggling. Perhaps the most interesting point about the book
is the light which it throws on the various dilhculties in the w^ay
of framing a fair and efficient tariff. Their existence, on the
one hand, is clearly showm ; but to me it seems no less clear that
they can be and are successfully overcome, and that the modern
tariff is, on the whole, an effective, often a highly effective,
instrument. For the rest the book makes most interesting
reading, and causes one to regret that it does not treat of its
subject at greater length and in fuller detail. But it docs give a
really excellent short treatment, and as such deser\es to be widely
read.

N. B. Bearlr

Railroad Tnxa,ii7>n in Minnesola : Analysis of the Gross Earnings
Tax. By E. V. Robijsison, Ph.D., Dii-ector of the Depart-
ment of liesearc-h and Statistics of the Minnesota Tax Com-
mission, and Professor of Economics, University of
Minnesota. (8t. Paul. 1912. Pp. 58.)

Tuts work is a reprint of a chapter from the third biennial
report of the Minnesota Tax Commission, and, althoflgh it is
primarily concerned with the practical problems of a single State,
it draws so widely upon general experience, and makes so many
careful comparisons, that it is of more than local importance.

Three forms of property or ad valorem taxation of railways
have existed in the States : (1) assessment by a multitude of local
assessors-, now retained only by the once progressive Ehode
Island, and abandoned elsewhere because of its inherent in-
equalities and absurdities ; (2) assessment by a State board of
assessors, but still according to the principle (or lack of principle)
of the general property tax ; (3) capitalisation, or valuation by the
“stock and bond” plan. In contrast to these are three forms
which-iiake income as the test of ability-to-pay, (4) taxation of
gross receipts, (5) gross earnings, (6) net earnings. After briefly
examining the others, Dr. Eobinson regards (2), (3), and (5) as
the only methods needing serious consideration, and their com-
parative merits are carefully discussed. The State assessment
method is disposed of as unequal, uncertain, and arbitrary, after
an appeal to facts^ which incidentally throw a vivid light upon
the general property tax as a whole. The ratio of the value as
assessed for purposes of taxation to the commercial valuation in

'4^2 THE ECONOMIC JOURSIl [SBPT.

various States is shown to vary from 7 ‘5 per cent, in Wyoming,
14‘3 in Washington, and 16*9 in Kansas, to 70*9 in Michigan
and 73*3 in Vermont, and taken as a whole the valuations are
at very low levels. The “stock and bond” method is still used
in six States — Pennsylvania, Massachusetts, New York, Dela-
ware, Kentucky, and Connecticut. It is defective because of the
deceptive character of stock values, the fact that the whole is not
necessarily the sum of the parts, and that values are affected by
non-transportation assets such as hotels, mines, &c. — the main
objection to the “net receipts” method also. Moreover, it is of
doubtful legality under the constitutional law. The author is
concerned to show that the gross earnings method now employed
in seven* States is the best yet devised, and his argument loses
nothing in force on account of the fact that Minnesota had the
lucky prescience to adopt the system early and maintain it
steadily. It i^ advocated because it is constitutional, is sub-
stantially just as between different roads, is not self-assessed,
varies properly with business conditions, and dispenses with
valuation. It does not corrupt politics, legalise excessive rail-
road charges, or retard railroad construction. Although some
of the considerations seem to move at times in a vicious circle.
Dr. Pobinson makes out his case with great skill, the argument
being lu^id and well arranged. The problem is essentially an
American one (since the taxation of annual valuc.-i raises quite
different issues), but the introduction of thi^rough-going oysiems
of income taxation will in course of time profoundly modify the
whole position.

J. C. ftTAAir

Die ynodernen Losch- und Ladeeinrichtungen und ihre Bedeutung
fur die Sccschiffahrtshetriehe. By Dr. Augustin Haask.
(Jena : Gustav Fischer. 1913. Pp. 112. Price 3 marks.)

It is generally recognised at the present time that one of the
greatest assets of a port is promptness in the discharge ap/l load-
ing of cargo, and it is with the facilities provided at Hamburg for
such “rapid dispatch” that Dr, Haase is concerned. He selects
Hamburg as being “the most important Continental seaport”
(p. 1), and, except for an occasional* reference to Kotterdam or
Antwerp, and some tables of comparative charges in the appendix,
his whole attention is confined to the Germaii port. The main
purpose of hi^’ first seventy pages is to describe in non-technical
language the works and apparatus at Hamburg for loading and

1913] HifASB : DIE ^DBBNBN LOSOHBINRICHTDNGBN 4 ^.

• ^

discharge. He adds some historical sketches and some geo-
graphical explanations, so that this part of the book might be
described as a handbook to the port, academically annotated.
There is a large and detailed collection of particulars as to
accommodation, equipment, and charges, which should be useful
for reference.

Not until the fifth of his six chapters (which bears as its
heading the title of the book) does the author enter on a more
general treatment. He begins with an account (pp. 72-6) of the
growth and increasing regularity of ships, and of the development
of shipping as a separate business, which, although necessarily
containing a certain amount of familiar matter, i... an admirable
exposition, and leads up to the point which is the key to his
subject — the necessity of keeping valuable ships in port for as
short a time as possible. In a very interesting series of tables
are then set out the comparative costs of the vapous means of
discharge available, showing the cases in which each method is
most advantageous.

Hamburg presents twm distinct methods of discharge : firstly,
at moorings in tne stream ; and secondly, at the quays. Probably
there is no other port of equal importance where these twm
methods could be better seen side by side, and their comparison
is one of the most valuable features of the book. While Jhe chief
appeal of the work will be to the student of port methods, the
geographer will find interesting but scattered information as to
how inland water communications favour overside discharge, and
as to the various effects of ice in winter. Historical interest lies
in the accounts of the dev^elopment of special methods for dealing
with grain, coal, and petroleum, and of the growth of the equip-
ment of Hamburg.

As the opening chapter is mainly historical, it is a pity that
the tables inserted have not been recast ; although the dates on
which the various works were opened are given, they are not
arranged chronologically. A simple plan of the port would have
been helpful. The book represents a detailed and lucid treatment
of a fcorriiewhat restricted subject.

F. A. Howr

Die ausldndischen Elemente in der russischen Volkswirthschaji .

By Dr. B. Ischchanian. (Berlin : Siemenroth. 1913.

Pp. xviii-f300. Price, Mk. 7.)

The cultural and economic development of Russia presents a
phenomenon unlike that of all Western nations. Where the latter

434

THE ECONOMIC JOURNAL

[sept.

bf».ve evolved mainly through their own innate forces, Kussia has
at all times called for the vivifying influence of the more advanced
lands and received i<. in men and in capital. Inhabited by wander-
ing and warring tribes, ravaged by the Mongolian invasions, cut
off from easy access by the inclemency of the seasons which
periodically closed the Baltic approach, that great Continental
plain remained in a condition of semi-barbarism after its Western
neighbours had proceeded a good way on the road of civilisation.
Greeks from J^yzantium and Scandinavians were the forerunners,
but from the end of the fifteenth century Italians, Danes,
Germans, and English were brought over by the Tsars to instruct
their people. The history of this process of education is the iheme
of Dr. Tschchanian’s book. He traces all its ramifications and
assembles all the available information in a manner useful alike to
the historian of culture and to the business man studying the
scientific basis of investment.

Bioughly speaking there were two colonisaiiofis , one by men,
the other by money. The former has two modes, the earlier being
the introduction of instructors, as we know from the familiar
stories of Peter the Great: the second, as followed by Catharine
and her successors, of the settlement of German agricultural
colonies in Poland, South Ilussia, and Transcaucasia. In 1890
there weje 3IO,()Ot) such colonists in South Russia, in 1901 there
were 600,000 in Poland. The administrative measures by vhich
that movement were furthered are set forth in detail by tlie author
and are of much interest. The colonies have been economically
successful, but their civilising influence, in his ojunion, has hocn
very limited. With the nineteenth century we come to ihe
exploitation of Russian material resources by foreign inei* and
capital. The textile industries of Poland and of Moscow aie
German ; the coal and iron industries are Belgian and French : the
petroleum industry is Swedish and English. Of course, men of
all nations took part in each industry, but the dominant nationali-
ties are as stated. Most noteworthy is the story of Ludwig
Knoop, of Bremen, who stood as the intermediary between
English capital and Russia in the ’forties and 'fifties. 'Tie was
the guara-ntor of credit ; he founded spinning mills and equipped
them with English machinery —in his life-time he founded 122;
he was the great organiser and also a jrnonopolisfic and speculative
contractor. The Russian proverb ran, “Where there is a church,
there is a priest ; where there is a factory— ^ l\no(>p.’’ All this
development is carefully traced out with lists of companies, their
capitals, and their dividends. Parallel with it there is an analysis

1918] CLABK : THE CONTEOL OP TEUSTS 435

of the foreign population of Eussia and its activities. The growth
of the Eussian national debt is also described, and its burdensome
character, owing to its unproductive nature, is also brought
out. France is the chief creditor; Britain took part mainly in
loans for railway development.

Henry W. Macrosty

The Control of Trusts. By »J. B. Clark and J. M. Clark.

Enlarged and rewritten. (The Macmillan Company. Price

4s. 6d. net.)

This larger edition of Professor Clark’s earlier book^contains
an interesting de' elopinent of his scheme for dealing with the
great corporations. It should be read in connection w ith Prosident^
Wilson’s chapters on the same subject in his book The New
Freedom, and Stevens’ valuable collection oT original docu-
ments. Profi^ssoi Clark holds that it is possible, by a variety of
dilferent safeguards applied at different joints, to retain the
Trusts a va'Uable result of economic evolution and regulate
their action in the public interest. The fiedd must he kepi open
for the independent producer, both actual and possible, mainly
by the suppression of that formidable method of Trust activity,
the discriminated price. Professor Clark believes this cm be met
by the enforcement of a level price, at least within certain areas,
and with the possible help of the zone system of transport rates ;
and by such a reduction of the tariff as will prevent the huge
subsidies out of which these local “cuts” have been financed.
This is the main theme of his argument; the instrument of its
application to be an Interstate Trade Commission on the lines of
the Interstate Commerce Commission.

The points which seem to me of most interest in the argu-
ment, which is closely reasoned and of great economic value, are,
in the first place, the claim that a rigorous suppression of com-
binations cannot be afforded in view of their possible working
econ?eivias, the more so w^hen the land is taken up, and a nation
is throwm back for its future sustenance on industrial invention ;
and, in the second place, the phenomenon of competition called
in as a remedy for the evils of combination — comj^etition which
was the disease which combination was itself to cure. The inter-
lacing of these two economic forces, as both in their measure
necessary to economic life and progress, is the moral of the
argument.

D. H. Macgrbgor

436 THE ECONOMIC JOURNAL [SEPT.

Leasehold Enfranchisement. By E. A. Collins. (London:

P. a. King and Son. 1913. Pp. 117.)

Mk. Collins writes as an advocate of compulsory enfranchise-
mcni. Tn llie main, he bases his case on a general statement of
the leaseholder’s grievances. This is to be regretted. No one
would now deny that the leaseliold system is capable of abuse, and
that, in fact, it sometinjes is abused. The extent of the evil is
more difficult to ascertain. Mr. Collins throws no light on that
point. True, he tells us that he has twenty-five years’ experience
as a solicitor in London, and his general impressions are therefore
entitled to some weight. But the leasehold system which is the
rule in London is the exception in the country as a whole. We
are not confident that Mr. Collins has altogether avoided the
mistake — so common in Ijondoners — of assuming that the metro-
polis is typical of all large towns. At any rate, he affords us no
material for a quantitative analysis of the situat^jn.

The fact that an evil is not widespread is, of course, no reason
for neglecting it if the remedies proposed are effective and do not
involve any considerable inconveniences. It is doubtful whether
the somewhat old-fashioned proposal which Mr. Collins supports
satisfies either of these conditions. lie suggests that all future
leases (other than mining leases) granted for a lUV or lives, or
with a pVrpetual right of renew^al or for terms exceeding ibirtv
years, should by statute include the same right of compulsory
purchase as is now given to railway companies and other cor-
porate bodies. This right should be given also to the holdeis of
existing leases that fall within the above definition. Contracting
out should be forbidden. There is one serious weakness in this
scheme, as in all schemes of a like nature. If a long lease is
made to carry with it an option to buy the freehold, there will be
a tendency among owners who object to selling outright — and
Mr. Collins tells us that they are numerous — to substitute for the
long lease a short lease with a tacit undertaking to lenew. The
short lease is open, in a greater or less degree, to almost all the
objections that apply to the long lease, and its tenur*^'*’^/ less
secure. With the details of Mr. Collins’s j)lan we have not space
to deal. It must suffice tc' remark that he considerably under-
rates the difficulties in his way. It is surprising, for instance, to
find a lawyer calmly accepting the principles of valuation laid
down in the Lands Clauses Acts, and in the^ case-law that has
grown up round them, as “a system that has worked satisfac-
torily : the tendency of all recent legislation providing for the
compulsory purchase of land is to override and upset that systto.

1913] COLLINS: LEASEHOLD BNPBANCHISBMBNT 437

Though Mr. Collins is chiefly concerned with leasehold
enfranchisement, he makes one or two other proposals which are
more in accord with the trend of modern opinion. Thus he would
empower the leaseholder to have onerous covenants set aside by
showing cause before a permanent Commission constituted for this
and similar duties. In the case of short leases the leaseholder
should, he urges, have a statutory right of renewal subject to an
appeal to the Commission. There seems to be a growing con-
sensus of opinion that the problems connected with the tenure of
land are to be solved by the institution of some such machinery
for arbitration between landlord and tenant, rather than by rigid
regulations like the statutory provision for a universal right of
compulsory enfranchisement. But those who wish to ‘obtain a
clear and concij^t statement of the arguments advanced by the
older school of reformers cannot do better than read Mr. Collins’s
little book.

G. F. Shove

NOTES AND MEMOEANDA

The Economic Revival of Messina.

Of all the inhabitants of Messina whom the evening of
December 27th, 1908, called to rest, only two-fifths saw the dawn
of the 28th. When, in a few moments, sixty thousand people had
been killed and many thousands wounded, it might have been
supposed that all life would abandon in horror a region doomed
to destruction knd death, and that — as in the c^se of Pompeii —
only the ruins of the unhappy city would remain as a witness to
future ages of the impotence of man against the forces of nature.
The houses had all fallen ; the wharves of the port were shattered ;
the railway lines derelici ; where a city had been, there extended
a desolate' stretch of ruins.

In less than five years Messina is reviving. The number of
the inhabitants, which in 1908 exceeded 100,000 in the whole
territory of the commune, and 100,000 in the city itself, has
already risen again to 1110,000 (of whom 75,000 inhabit the city).
How does so large a population live?

Agriculture and fishing sufiSce to maintain about 25.000.
These industries did not suffer seriously by the earthquake ; and
the farmers are able to derive large incomes from the cultivation
of oranges and lemons. Fishing is still carried on in a primitive
manner, and might easily be made very remunerative. There
are no large manufacturing establishments; still, altogether,
manufactures provide a living for about 60,000 persons. Those
they directly occupy are about 20.000 : of thc.se ,5,000 are engaged
in the treatment of vegetable and animal produce (L"UiLir", and
the manufacture of macaroni, preparation of preserved foods,
tanning, work in wood) ; 2,000 in metal work and the manu-
facture of machinery : 11 ,000 in house building and kindred indus-
tries ; 1,500 in weaving and making clothes. Almost all the
manufacturing businesses were destroyed in the disaster of 1908,
together with the buildings and machinery ; but year by year the
old factorie.“ have returned to life, and the manufacturing

SEPT., 1913]

THE ECONOMIC EEVIVAL OF MESSINA

439

production is rapidly increasing. The special conditions resulting
froiii the earthquake, the necessity of removing the debris (now
about half removed), and of rebuilding the houses, have caused
house building to become the most flourishing industry.

The number of those who make a living by trade is from ten
to twelve thousand. Many are engaged in retail business, but
there are also some large firms occupied in foreign trade.

Then there are very many (about 24,000 persons) included in
the families of professional men (lawyers, doctors, engineers, &c.)
and employees in public offices; for Messina is an administrative,
military, and legal centre of considerable importance. All the
public offices that existed before 1908 are again working, and
the educational institutes have been reopened and are largely
attended.

To show how the necessary conditions for the life of Messina
are now re-established , 1 shall give some statistics of its trade and
the business dctfie by the railway.

Messina is the station for the ferryboats for carrying passenger
and goods trains, and thus connects the Sicilian railways with those
of tlie ’uainianJ. The goods traffic by them is becoming every
year more important : to give an idea of it, it will be enough to
say that tlu' truckloads of lemons and oranges alone transhipped
to the mainland in 1912 were 8,000 in number. The business
done at the Messina railway stations themselves is not very great ;
240,000 tons of goods were loaded and unloaded, and 609,000
passengers left Messina, or arrived there, in 1911.

The shipping business may be summarised as follows : In
1909 the ships entering and leaving the port were 5,402 in
number, with a net total tonnage of 4,166,000. Sixty thousand
passengers embarked on these ships and landed from them, while
they received and discharged cargoes of 467,000 tons. In the last
years before the catastrophe the total amount of goods loaded and
unloaded did not exceed 500,000 tons.

^rhe trade of the port will seem greater when w^e consider that
much of the merchandise exported from Messina is of great value
in pwr/pOition to its volume. The statistical returns of the exports
and luiporis, including, however, only a part of the goods loaded
and unloaded, show that their value was fairly high: in 1912
forty million Italian lire for the exports and thirty million for the
imports. In 1907 the exports were valued at about fifty million
and the imports at thirty million ; since 1908 the exports have
diminished, as par\ of the trade has been diverted from Messina
to Catania and Palermo.

440 * THE EOON<^MIO JOUKNAL. [SBPT

Ihe exports consisted, for seven-tenths of their total value
(that is, twenty-eight million Italian lire), of lemons, oranges, and
the products of these fruits : peel, juice, essences, citrate of
calcium, &c. Citrate of calcium and lemon juice are used in the
preparation of citric acid, an industry not much developed in
Italy. This class of product ^ forms about one-fourth of the
entire Italian export of lemons, oranges, and their produce. The
principal other centres for the export are Catania and Palermo.

The other three-tenths of the exports from Messina are also
largely vegetable piodiice : almonds, walnuts, hazel nuts, canned
vegetables, olive oil, wine, tar, (fee. We may also include with
these wheat paste, which is exported in a fair quantity.

The *imports consist principally of foodstuffs (grain, coffee,
beverages, &c .) ; raw material for manufacture (timber, skins,
coal, &c.) ; and manufactured produce (agricultural and industrial
machinery, cloths, (fee.). The value of the coal imported in 1912
was almost three million lire.

Together with trade, the banks have resumed business : the
discounts and advances granted by the tw^o largest banks alone
amounted in 1912 to fifty-four million Italian lire, a figure little
lesfe than that for 1908 (fifty-six million). And the accumulation
of capital has been rapid enough : the cash deposits in the banks
and savings banks at the end of 1912 amounted to sixty-five
million lire. The value of the Italian Government Debt Secirities
on which interest is paid at Messina was about sixty-three million
lire.

The revival of Messina which, at first sight, might appear
strange and inexplicable, is partly due to the tenacious attachment
of the people of Messina to their home ; but, to a greater degiee,
is the necessary consequence of economic conditions. The exist-
ence of a large natural harbour at the moat suitable point for tlie
passage of the railway between Sicily and the mainland, a port
of call for ships crossing the straits, where emigrants from
Eastern Sicily to America may embark, and where the produce
of the region may be accumulated for export abroad, calls for a
city at this point. " '

The ec^onomic revival is now almost complete. But before the
life of the city can resume its ordinary course, permanent dwelling
houses must be built. Up to the present very few have been
erected. Most of ihe people live in wwden barracks, only to be
put up with as teinjx^rary dwellings, and now, after exposure for

' Two-fifths of this export goes to the United States, one-fifth to the United
Kiugdom, and one fifth to Gorniaiiy and Ku«sia.

1913] THE ECONOMIC EBVIVAL OF MESSINA 441

three or four years to a very variable and rainy climate, in fairly
bad condition.

There have been great difficulties in the way of permanent
rebuilding of the city. There was no detailed map of the city
such as was required for the preparation of the new city plan
based on a scientific study of the effects of the earthquake. Before
such a detailed map could be made a great deal of work had to
be done in the way of removal of ddbris. Only at the end of 1911
was the new city plan ready ; the delay was partly due to inaction
and want of energy on the part of the persons entrusted with the
work, partly to lack of funds, partJy also to serious technical
difficulties; and, perhaps more than alK to the interminable
official formalities that hamper the whole life of Italy. *

When it was i^jssible to begin rebuilding, many controversies
arose as a result of joint ownership, and delayed it further. The
ownership of almost every hoxise in Messina was shared among
an incredible nivnber of persons, and the courts were not always
successful in the attempt to reconcile their rights. The State
gives much encouragement and subsidises proprietors who rebuild
their houses, and has extended these favours even to proprietors
of iipjx^r floors (which cannot be rebuilt as the maximum height
of the houses has been fixed at ten metres from the ground) who
build on new sites. The State contributes very generously (more
than half the cost of building) ; but the grant is subject to so
many conditions and formalities that up to the present it has only
been obtained in a few score of cases.

The capitalists do not show much enthusiasm for investment
of their money in property that is fixed in a legal but not in a
physical sense. For there is no proof as yet that even the most
solid constructions, in conformity with the injunctions issued by
the Government after 1908, and after serious scientific study,
will be able to resist earthquakes as violent as that of 1908.
Meanwhile, the few who have dared to build or restore houses
compensate themselves for their daring by charging their tenants
very heavy rent.

Tb*- b'jiiiding problem does not seem very near its solution,
which will be made easier, though not complete, by the work of
the Unione Messinese, an institution for the building of dwelling
houses for the people, and by that of the Government, which has
begun to build houses for its employees.

The rebuilding of pulblic edifices has hardly commenced and
proceeds very slowFy. This is one of the points in which the
Government is to blame, though it cannot be denied the merit
No. 91. — VOL. XXIII. H H

442 " THE5 ECONOMIC JOURNAL [SEPT.

o| having made suitable provision for the temporary housing of
the population.

It is likely that for at least another three or four years many
of the people of Messina will of necessity still be living in barracks.
But there is no doubt that the advance of new buildings will
gradually reduce the area of the wooden city, and finally cause it
to disappear. Only then will the stranger see from the very
appearance of the city that the life which animated Messina
before the terrible catastrophe has completely returned to it.

G-iorgto Mortara

The Trades Board Act at Work.

It is somewhat early to write about the result of the Trades
Board Act, but in view of the proposals to bring other trades
within its scope immediately the earliest eiiects are worth
noticing. For tliia reason I think that some facts collected by
the Hebden Bridge branch of the Amalgamated Union of
Clothing Operatives are of great interest. Ilebden Bridge^ is
a small town in the West Biding of Torkshire, and is the chief
centre of the fustian trade in this country. As a considerable
amount^of fustian is made up into clothing in the factories of
the district, and this branch of Irade comes ander ti^e Trades
Boai’d, it offers a favourable opf)orturjity observing the
working of the Act. The trade is confined within a small area,
and to quite a limited number of firms all engaged on the same
class of wx)rk, the number employed being about 3,000, nearly
400 of whom are men or youths.

The two chief features about industry in the district have
always been the very low wages obtained by men, and the absence
of trade unionism. This may be accounted for by the decay of
industries in which men were formerly employed, and by the
great demand for fcuriale labour, which led men with families to
accept, lower rates rather than leave the district where their
daughters could earn higli wages; also by the facT thai until
recently many small firms continued to exist, so that there w’as
little difference' in social standing between the employers and
their workpeople. Simultaneously ^ilh the advent of the Wages
Board there Las come a w ave of trade unionism over every branch
of industry in the district, and it was for. purposes of labour

» See “The Industrial Evolution of a Manufacturing Village,” Economic
J ouHNAL, December, 1911.

1913]

THE TRADES BOARD ACT AT WORK

448

organisation that the facts set forth in this paper were collected.
I think it is quite clear that the Trades Board Act has done three
things for the clothing trade of Hebden Bridge : —

(1) It has lessened the hours of labour for <^verybody in the
trade.

(2) It has raised the wages of men, but has not affected
women’s wages.

(3) It has helped to create a new spirit among the men ; the
principle of combination as a means of improving wages and
conditions of labour which had hitherto failed to grip more than
a few individuals has now been suddenly adopted, and the men

, are joining the union in almost a mass movement.

The Act, which became compulsory on February 20th, fixes
a minimum wage oi 6d. per hour lor men, and S}d. per hour
for women. Before it came into force the clothing faciories
worked fifty-eight hours per week. Hence, as a considerable
number of men j.vere employed at wages ranging from 20.?. to
23^. per week, it meant, if the factories continued to work fifty-
eight hours, an advance of wages of from 6 . 9 . to 9.9. a week for a
large propirtioa of the male workers. Inhere had been sugges-
tions for shortening hours previously , but nothing had come of
them ; but before the Act actually came into force the employers
decided to reduce the hours to fifty -two, without any alteration
in wages. This reduction of hours applied to all workpeople, so
that if a man has not received an actual increase in wages, he
has received what is equivalent to a higher rate per hour ; there-
fore the Act has been a direct benefit to every man and youth
in the trade. The women and girls are all employed on piece-
work, but as their rate of pay yields a very much higher wage
than the minimum of d\d. per hour, the Act has not affected
them directly in any way. It might have been expected that the
reduction of hours would have lowered the wages of w^omen, but
that does not api)ear to have been the case. There is a general
opinion that quite as much work has been done in the fifty-two
hour week as in the fifty-eight. This would be difficult to prove,
l)ecause»'ooni])S.risons made with the first half of 1912 are not of
much value, owing to the disturbance caused by the coal strike. I
have before me the report and balance sheet of the Fustian Co-
operative Society for the half-year ending June, 1913, and the
increase of trade done in their factory over any previous half-
year bears out the general opinion. As there has certainly been
no outcry among the women about the matter, we may fairly
conclude that their earnings have not been less. One reason for

H H 2

444

THK JfiCONOMIC OOUBNAL

[SBPT.

'his is that owing to the higher w^ages now being paid to the
men, greater efforts ai’e made to keep them fully employed, witli
the result that there is less playing between jobs, and that the
women’s work is therefore more regular. Whether there has
been increased strain or any other result of that kind cannot yet
be determined. But so far shorter hours appear to be a clear gain
to both men and uomen. It would appear also to have been
beneficial to emj)loyers, for if there has been no decrease in output
they will have saved on power and lighting.

In June this year the local branch of the Clothing Operatives
Union detei iuined to take a census of their male members to find
out what wages were being paid. In order to ascertain the effeci
of the J'rades Board Act t^iey also asked for information about
wages a.nd hours before and after the Act came into operation.
They issued the following circular to their members : Please
state : -

1. Branch of trade (that is, whether stoc^fe or lining cutter,
fitter, or warehouseman, etc.).’

2 . Ninnb(*r of hours worked per week.

[]. Hate of wages.

11 any clianges have been made through the operation of the
Trades Board Act, please fill in these additional particulars.

4. Number of hours worked per week previous lo its
operation.

[). Kate of wages previous to its ofveration.

fi. Has the A(*t (aused any changing of jobs or any changing
of methods of working?

There were ‘250 of these forms sent out, and 230 were retuinerl
duly filled up. A committee of four was appointed to f 'i amine
them, and as the returns from each shop w^ere in the first instance
kept separate, the committee vrere able lo check them from their
own personal knowledge, and th('y have twery reason to believe
that tluw are substantially accurate. These returns show quite
clearly what nHluction in working hours has actually taken place.
Before the operation of the Act,

One firm employing 18 males worked £5J hours.

»» ^ 7i i) ,,

The remaining firms „ 20G ,, ,, 68 „

Since I'Vbruary 20th, the date on which the Board of Trade
made an oblitjatory order,

One firm employing 22 males has worked 62^ hours.

One ,, ,, 6 ,, ,, ,, 64 ,,

The remaining firms ,, 202 ,, have „ 52 „

1913]

THE TRADES BOARD ACT AT WORK

445

This gives an average reduction of more than five and a half
hours per week, which has been a great benefit to the family and
social life of the district.

The returns reveal some striking facts about men’s wages in
the clothing trade of Hebden Bridge, and also prove that the
Trades Board Act has caused some remarkable increases to be

given. The minimum of Cyd. per hour is not compulsory until
the age of twenty-two ; therefore, as sixty-one out of the total
number making returns are at present getting less than
we may presume they are juniors. Out of the 230 male workers,
about whom we have definite informatioji, 134 received increases
*when the Act came into force. The lollowing table gives par-
ticulars of the advances received :~

s. d.

32 mon recoivod an advance of 1 0 per week.

‘A5 „

y j> ♦> »>

23 }» »» »»

1 ^ >> » ♦ » »

„ 5

3 ft ,, «>

*•* >} «> »»

„ 7

1 man „ ,,

„ 7

^ It it >»

The average increase per week w^as ds. per man. In no case Ho
the returns show any reduction of wages, and as th^ union
officials have not hoard of any such instance, it is evident that the
increases are a clear gain to the workers.

These returns also shed light upon that most iiderestmg and
important problem as to whether there is any danger of a legal
minimum w^age becoming tJie actual maximum. Of the 134
wdio received advances, 111 had to receive them in order to bring
their earnings up to the sum required by the Act; but the
remaining twenty-three were getting the minimum before they
received the advance. Tliese twenty-thn'C were evidently con-
sidered by their employers to be worth more than the lower-paid
men, and when the wages of the lower-paid men wwe compul-
sorily raised, •they were given a corresponding increase. This
seems to indicate that whakwer causes have tended to produce
variation of wages in the past will continue to operate after a
minimum has been fixed by a Trade Board.

The fears of some that increased wages would lead to
numerous dismissals of men and the substitution of boys have up
to the present be^^n falsified. The demand for female labour in
the district is so great that there is no possibility of replacing
men from that source ; and as there are no unemployed boys they

446

THE ECONOMIC JOUBNAL

[sept.

could not be used to do the work of the men. Numerous adver-
tisements have appeared lately for boys and youths which seem
to denote a desire to find cheaper labour, but as there is no supply
at the present time employers have been compelled to pay the
advance. The low wages of the past have naturally led to the
employment of some inefficients in the trade, hut the number that
have proved not to be worth the higher wage has been very few.
As far as can be ascertained only four men have lost their work
through the operation of the Act, and one has got wmrk with
another firm and is now receiving the minimum ; a second has
gone hack to the work he was engaged in before he came into
the clothing trade ; the third is w^orking as a labourer in some
works near by ; but the fourth we have been unable to trace.
Tlie Act came into force at the end of the busy season, so that
men could have been more easily disposed of than at any other
time of the y^ar, and therefore it is not likely ^here will be any
further displacement of labour. There has been some re-arrange-
ment of work, but in reply to Question 6 on the circular sent out
by the union only two made any remarks, and these were so
indefinite in character as to warrant us m saying that the workers
have not suffered in any way.

The effect of the Act upon the organisation oi labour Iuif
been nibst remarkable ; the Clothing Operatives Union had only
twenty-nine male members at the beginning ot tliis year, and
they have now over 300. This result has been achieved without
any outside help, the same local officials who have worked for
years with so liltle success have now found it quite easy to enrol
members. Two other causes have helped toward tliis success -
the wave of trade unionism that has lately swept over the country
has undoubtedly affected Hebden Bridge, and recently the dyers
in the fustian Irade have both increased their wages and lessened
iheir hours by trade union effort ; but there is no doubt that w^hat
has moved the clotliing operatives most has b^'on the result of
the Trades Board Act. The great barrier to trade-union organisa-
tion is lack of imagination among the workers. T^j them things
have always been as they are, and alw^ays will be. But in Hebden
Bridge they have received a shock which has given them vision.
They have seen things alter before their eyes, they are working
less hours and getting higher waJges ; they have realised that
employers are not all-powerful, and are therefore determined to
have a share in settling the future conditions of their labour.
The union is already strong enough to have formulated a “wages
list/' which will shortly be submitted to the employers, who will

1913]

OFFICIAL PAPEBS

447

then for the first time be faced with the necessity of bargaining
collectively with their workpeople instead of making individual
arrangements.

The figures given above represent about 70 per cent, of the
clothing trade in the district, and may be taken as typical of the
whole. Apart from the general state of prosperity in which it
shares, and the high price of cotton goods, there is nothing
abnormal in the industry at the present time. There seems to
have been no disturbance of prices, and the changes have come
almost without being noticed except by the persons concerned.

S. C Moore

Official Papers.

Beport on Profit-ShQnng and Labour Co-partnership in the
United Kingdom. [Ca. 6196.] 1912. Price 8^d.

The above Report possesses not only exceptional interest from
the imp^ rtan. of its subject-matter, but also from the fact that it
was tlie last piece of work upon which David Schloss was engaged ,
and it constitutes a not unfitting final contribution from one whose
work throughout has been marked by thoroughness, by mastery,
and by insight. •

A brief section of the Report is concerned with profit-sharing
and labour co-partnership in co-operative societies, but the greater
part of it deals with cases in which these forms of industry exist
in non-co-operative enterprises. Of such known to exist there arc
133, of which 73 have been started at various dates during the
last ten years. Four date back forty years and upwards. Profit-
sharing schemes known to have been abandoned, during a period
which ranges from 1829 to 1910, number 163.

The Report begins with an inquiry into the meaning of the
terms “profit-sharing ” and “labour co-partnership,” and the most
general features of the former are accepted as being found when
“an eTnpIoy?r agrees with his employees that they shall receive,
in partial remuneration of their labour, and in addition to their
wages, a share, fixed beforehand, in the profits realised by the
undertaking to which the profit-sharing scheme relates.”

In its simplest form labour co-partnership is interpreted as
involving not only the condition “that the worker should receive,
in addition to the standard wages of his trade, some share in the
final profit of the business,” but should also, by accumulating
either the whole or part of this share in the capital of the business

448 THE ECONOMIC JOURNAL [SEPT.

employing him, thus gain “the ordinary rights and responsibilities
of a shareholder.’*

Thus, although labour co-partnership differs from profit-
sharing, both spring from the same root, and the former is but
a further development of the principle of endeavouring to make
the association closer between capital, control, and labour.

I The inter-connection between the two is illustrated by the
treatment of the subject in the second section of the Eeport,
which, in a general summary of the particulars regarding profit-
sharing and co-partnership, makes no attempt to distinguish
between the two, but, in setting out such general figures as those
relating to the number of the schemes which are being dealt with,
their duration, the causes of cessation, and the trades in which
the various schemes have been formed, groups both together.

Bui- although the two broad classes of enterprise can be distin-
guished, and aHhough analysis shows clearly whether profit-
sharing is or is not accompanied by some measure of labour co-
partnership, the manifestations of each class are themselves of
great variety, and a valuable analysis of the schemes now in force
which is included in the Eeport makes this abundantly clear.

In addition to the general analysis of schemes now in force,
the Eeport contains a detailed account of a selection including
that of tlM^. South Metropolitan Gas Company, the best known
and perhaps the most successful of all.

It is remarked in the General Summary of the Eeport that
schemes involving investment by employees in the capital of
their employers’ businesses have been meeting with a large
measure of success, but it is also pointed out tluit “great caution
is necessary in drawing inferences of a general character irom
these results.”

“In the first place it is necessary to point out that in the great
majority of cases the experiments are of such comparatively recent
date that it may be somewhat premature to found upon results
which appear to have been attained in these instances any very
positive conclusion with regard to the general application of the
co-partnership method . ”

Secondly, there is the fact that “a large number of these experi-
ments have taken plac(^ in a single industry, and that this industry
(gas-making) is carried on under very special circumstances and
enjoys exct3ptional advantages.”

Thirdly, “the issue of shares to employees tmeanj an addition
to capital account, and this is not alw^ays possible or desirable ”
(page 11),

1913]

OFFICIAL PAPBES

449

These warnings are a reminder that the conditions of complete
success of experiments in labour co-partnership may be exacting,
that the inherent circumstances of all industries are not equally
suitable, and that permanence and stability bec( me considerations
of exceptional importance.

The moral qualities also required from all who are parties to
these schemes have to be of no mean order, and it is not. surprising
therefore that the industrial forms of which the Report deals are
still exceptional. But some of those that exist have, nevertheless,
a value and significance out of all proportion to their number and
their size.

E. Aves

The Industrial ounc/il : Bepori on Enquiry into Industrial
Agreements. [(!d. 6952.] 1918. 2Jc/.

Tn June, 1912, the Government asked the Tnclustrial Council
to consider (1) wlrd is the best method of securing the due fulfil-
ment of industrial agreements; and (2) how far, and in what
manner, industrial agreements which are made betw^een repre-
sentative bodies of employers and of wwkmen ehonld be enforced
throughout a particular trade or district. The Industrial Councirs
report is an interesting and important document, the outcome of
the deliberations of employers and workmen, who ^ may be
expected to understand, from first hand experience, the matters
under consideration.

It is not at all unlikely that, their first conclusion will come
as a shock to a large section of the public who a year or more
ago were treated by the daily Press to accounts of breach of
agreements by workpeople. Indeed, it seemed, owing to the
prominence given to the question of unauthorised strikes and
broken agreements (often without careful investigation) that the
trade unions were invariably guilty of roguery. According to the
Industrial Council, however, notwithstanding [the] difficulties
inherent in dealing with large numbers of woi*kpeople, . . . agree-
ments in most cases are well kept. Although a number of
instances ol alleged breaches of agreements have been referred
to in the course of the inquiry, the evidence of a considerable
majority of the witnesses is to the effect that agreements have,
viewed generally, been dijy fulfilled by both parties. The
breaches that have been mentioned were, with a few exceptions,
the result of the action of comparatively few men, or due to
exceptional circumstances, or to differences and misunderstand-
ings in regard to points of interpretation, and are not, as a rule,

450

THE ECONOMIC JOUBNAL

[sept.

countenanced by the respective organisations.” Again, “where
agreements have been broken it is frequently found that they were
made at times when, owing to the abnormal conditions, great
difiBculty must have been experienced in arriving at a fair adjust-
ment.” Where a question of interpretation is involved in cases
of alleged non-fulfihiient of agreements (which is not infrequent)
the Council are of opinion that the point in dispute should be
referred to an indej)endent chairman, or to arbitrators, or to a court
of arbitration.

The Council express themselves in favour of the continued
maintenance of voluntary conciliation and arbitration boards, and
against compulsion, or, to put it in their own words, against any
“alternative method based upon principles other than that of
mutual consent.” At the same time, they consider that the
machinery for the voluntary settlement of disputes should be
strengthened by the right of appeal to some independent body or
impartial individual. ^

On the question of the particular methods of securing the due
fultilmenti of agreements, the Council lay great stress on the
importance of efficient organisation on the f)art of employers and
w'orkpeo}>le, and admit the value of “moral obligation.” On the
other hand, money penalties and money guarantees are considered
unsuitable, though it is recommended that “where a breach of
an agreement has been committed, no assistanc':, financial or
otherwise, should be given to the persons in breach by any of the
other members of the associations connected with the agreement.”

The consideration of the second part of the reference, relating
to the extension of industrial agreements, lias led the Indiislrial
Council to put forward a scheme of a very far-reaching char: jtcr.
Where trade union organisation is strong, they are often able to
exert sufficient pressure on non-associated employers to indu('.e
them to observe agreements made by the unions wiih the masters’
associations. Where, however, organisation is imperfect, “the
effective maintenance of agreements is jeopardised by the exist-
ence of a s(iction (perhaps only a minority) which is not party to,
and therefore not in any sense bound by, whatever agrl^mcnt may
be arrived at by the rest of the trade.” It is suggested therefore
that the Board of Trade should have power after inquiry to
extend agreements made by trade unions and employers’ associa-
tions so as to cover the whole trade or district, on application to
the central authority by either of the parties to the agreement,
provided that the Board of Trade are satisfied “that the associa-
tions represented by the signatories to the agreement constitute

1913]

OFFICIAL PAPBES

451

a substantial body of the employers and workmen in the trade or
district, and that the agreement is a proper agreement and one
that might suitably be extended.” Though agreements cover a
multitude of questions, that of wages is undoubtedly the most pro-
minent. The proposal amounts, therefore, to the establishment of
a legal minimum wage by trades » or sections of trades, through the
instrumentality of voluntarily constituted “trade boards,” whose
agreements would receive official ratification. This method has,*
indeed, been advocated as one way of attaining the legal minimum
wage (see The Crusade supplement for June, J912, article on
“The Legal Minimum Wage”). The suggestion was also put
forward by Mr. J. Ramsay Macdonald in the Ho.^se of Commons
in June, 1912, in connection with the Port of London Authority
dispute.

Tn memoranda ap[)ended to the Comicirs report the em-
ployers’ representatives suggest the initiation of an inquiry into
the effects of'^the JVade Disputes Act, 1900, obviously on the
assumption that the law has been abused. The suggestion is to
bo welcomed ; it might show that the charges of abuse, wdiich have
been fteely ma.de, are as baseless, generally vspeaking, as the non-
fulfilment of industrial agreements. Who knows?

Arthur GnRRNwoon

Hepori of the Departmental Committee on the Hours and Con-
ditions of Employment of Van Boys and, Warehouse Boys.
fCd. 6886.] 1913. Price 3d. Minutes of Evidenec. [Cd.

6887.] 1913. Thrice Is, lOd,

(luK code of industrial regulation has grown most unevenly,
particularly as regards hours of labour. The maximum hours of
labour of joung persons in textile factories, non-textile factorit's,
and places coming under the Shop Acts, vary, not because of any
differences in the character and intensity of the labour or tht‘
conditions under which it is carried on - though these differences
certainly exist— but chiefly because these and other forms of
industrial and commercial activity are at different stages of State
(or local) regulation. Some forms of labour, however, notably
that of van boys and of lads in certain kinds of warehouses, are not
regulated at all. Such boys, therefore, may work, without let or
hindrance, for “as many ]iours as God sends.”

The excessive number of hours which van boys in particular
w^ork is well kno^yn to those familiar with the problems of juvenile
labour. The evil was brought before the Home Secretary by a
deputation on March 27th, 1912, which not only laid stress on the

452 THE ECONOMIC JOURNAL ^ [SEPT.

long hours worked, but on the injurious effects of the work on
physique and on character. It was also pointed out that van boys
were unable to attend evening continuation schools, and that the
work was largely of a “blind-alley” nature. In a less degree,
these evils are found amongst warehouse boys. As a consequence
a small departmental committee was appointed “to inquire into
the hours and conditions of employment of van boys and ware-
^hoiise boys, and to report whether it is desirable that any, and, if
so, what, means should be taken to rc^gulate such employment ” ;
the terms of reference do not therefore explicitly include any
consideration of the “blind-alley” problem involved.

The in(|uiry has shown that the van-hoy problem is limited in
its application and arises only in certain towns, e.gf., London,
Sheffield, Manchesier, Liverpool, Ijeeds, etc. It is interesting to
observe tluit wffiile the volume of goods to be dealt with is naturally
a powerful influence affecting the occupation, the local demand for
juvenile lalxuir is also of very great importance, for in Bradford
and Huddersfield, where the textile industry offers opportunities
of employment, there is hardly any van-boy labour : whilst in the
neighbouring town of Leeds, where the demand for boys is not
nearly so strong, a considerable number of lads are engaged as
van boys. Anotlier influence affecting the distiibution of the occu-
fiation is the laxity or stringency with which by-law^s as to leaving
vehicles unSttended are enforced. In large towns, also, it is said
that the chance of theft of goods is greater.

Hail way van hoys, on the whole, are the most favourably
situated of all those engaged in the delivery of goods. The hours
as a rule are regular, and the chances of absorption good, Iho boys
becoming porters, ticket collectors, parcels office clerks, &c. “"he
parcels van hoys are drawn from a better class than the goods van
guards, and their conditions of service are generally superior to
those of the latter. The boys engaged by the parcel delivery com-
panies often work excessively long hours, and much of their work
is done late at night (though as a compensation they commence
later in tlie day). The tramway parcels delivery systems of
Birmingham, Manchester, Bradford, Halifax, and DubVi*a, employ
lads for reasonable hours, and the boys are more likely to obtain
permanent employment than is the case with the employees of the
private companies. It is, of course, urged that the parcels delivery
companies do not dismiss their boys, buf the lads themselves must
be aware that the limits of the business make it impossible for
them all to be absorbed. If the lads did not mo\fe off themselves,
the companies would be compelled to dismiss the bulk of them.

1913] OFFICIAL PAPBBS 463

The aerated and mineral water trade is essentially a seasonal
one, so that the van boys are engaged for about eighty-four or
ninety hours per week during the summer. Similarly, boys em-
ployed by biscuit manufacturers work up to 9 or 10 p.m. at
Christmas time. Laundry van boys are often employed for long
hours, particularly during May, June, and July.

According to Coleman v. Roberts, the hours of boys employed
on shop vans can already be regulated under the Shops Acta, and
this has been done in London and one or two other places. In
other towns nothing has been done and the hours of these lads are
therefore unregulated. As judged by the hours worked by other
types of van boys, however, excessive hours of employment — at
any rate in the case of the large shops - -do not seem to be
common. Thc..e boys, further, generally have ample opportunities
of gainiiig permanent employment.

The Committee conclude that in spite of the long hours, van-
boy employiii'ent is popular with the boys themselves, and the
occupation is said to be a healthy one. The (’ommittee recom-
mend that powers should be given to local authorities to frame
by-lav»s to regulate the employment of all van boys under eighteen
years of ape, and that no boy under sixteen shall be employed
before 6 a.m. or after 9,30 p.m. They would limit the hours of
labour of all van boys under eighteen years of age to seventy per
week, inclusive of meal times (which they put at hours per
day). Tlie usual public holidays should be allowed, or their
equivalent. Tt is suggested that records should bi* kejit for every
boy of the. times of commencing and cea.sing work, and of tlie
time allowed for meals, such records to be available for inspection
by the officers of the local authority.

On* the question of warehouse boys, the Committee agree thjit
generally the evidence shows that the hours of labour are not
excessive— though the good conditions they have found prevailing
in the firms of high standing are not likely to be universal. It is
recommended that in warehouses where goods collected by the
vtins are received, sorted and distributed, the liours of work of
those under eighteen should be regulated in the same way as for
van boys. In warehouses where goods are stored till required for
use, employment should be regulated either under the Factory
Acts or by some other means. In tlie case of wholesale ware-
houses where goods are* displayed for sale, the employment of
young persons should be subjected to the same restrictions as are
applied by the Shops Act to persons employed in retail shops.

The evidence brought before the Committee is of a very inter-

464 THE ECONOMIC JOURNAL [SEPT

estitig character, particularly that of the various social workers
who appeared to give evidence. Specially notable are the inquiries
of Mr. Norman Chamberlain and Mr. h>ederic Keeling.

Arthur Greenwood

Annual Report of the Chief Inspector of Factories and Workshops
for the year 1912. [Cd. 6852.] 1913. Price 2s, 5d.

PoR the administration of the Factory Acts there was in 1912
a staff of 205 inspectors and assistants, of whom eighteen were
women. The expenditure on administration is now rather under
£100,000 'a year. The present report indicates how the public is
getting value for its money, not merely in the detection of
evasions of the law , but in the accumulation of exact knowledge
of industrial conditions and the investigation of special problems.

Some interesting industrial developments are "'noted. The
exploration of the coal mines in the South of Yorkshire, around
Doncaster, has led to the introduction of new industries, such as
worsted-spinning and blouse-making, in order to utilise the
labour of women and girls. It is reported from the northern
division that the present j)eriod of good trade has “eithiT used
up the supply of women labour ... or has enabled many women
to stay at fiome and live on the better earnings of their husbands
without having to work themselves.*’ MiSs Anderson's state-
ment regarding the effects of the Insurance Act arc distinctly
worthy of notic(\ particularly those relating to changes in con-
ditions and contracts of employment attributed to the Act.
“Reductions in piece rates, resisted by strike, but unsuccess] ully,
and newer and severer graduated scales of fining for absence from
work are the most striking examples from Ireland. The retain-
ing in hand by eni})loyers of a certain pro})ortion of wages due,
avowedly to meet the expenses of the Insurance Act, fresh
charges for ))ower and for standing-room commencing just before
or coru'urreiitly w ith the coming into force of that Ac^t^ have been
the chief device complained of in English divisions, ' One case
is noted “where a charge for ‘ standing-room ’ levied on uninsured
as well as insured workers was newly imposed, bringing in a
return to the occupier of £95 per aqnum, or nearly half his
rent, without any fresh conveniences to workers.” This w^as
considered a contravention of the Truck Acts, and proceedings
w^ere successfully instituted. As Miss Anderson points out, “re-
duction of piece-rates in trades not touched by the Trades Boards

1913]

OFFICIAL PAPERS

455

minima are changes following the Insurance Act that cannot be
cx^ntrolled* if the workers are no', strong enough to resist them.”
It is admitted that, on the other hand, there are cases where
employers have voluntarily borne the reduction from wages them-
selves, either directly or indirectly.

One effect of the trade boom has been a scarcity of juvenile
labour, which has led to an increase of half-timers in the Lanca-
shire mule rooms, and “some irregularity has been noticed in
connection with sweeping under machinery — work that would be
legal for young persons who are more usually employed, but
illegal for children.”

The inspectors’ reports on sanitation are, “on the whole,
encouraging, but still suggest the need for impiovements in
certain directions.” Special attention was paid last year to the
lighting of workplaces, a matter which the chief inspector con-
siders has not yet received the attention it deserves. There are
reported G5G caiiCs of industrial poisoning (as agaiflst 755 in 1911),
154,972 non-fatal, and 1,260 fatal accidents, and 1,557 “danger-
ous occurrences,” the metal and machinery industries contribut-
ing a co^ ^ideiable profKirtion.

The report of the medical inspector refers to three interesting
investigations still in ‘pi'^^igress. Arrangenumts have been made
for obtaining data relating to operatives employed under favour-
able hygienic conditions to serve as a standard of c^Uiparison
with those employed under less favourable conditions. An
inquiry is also being conducted into the })hysique of young persons
employed in the cotton industry. The relation between fatigue
caused in occupation to working efficiency and to morbidity, to
which attention has recently been drawn, largely owing to Miss
Goldmark’s book on Fatigue and Efficiency^ and Mr. P. Taylor’s
Principles of Worhs Management, is being the subject of special
investigation. These inquiries, bearing so closely on the whole
question of industrial efficiency, will be awaited with interest by
economists and sociologists.

Arthur Greenwood

Report of an Inquiry by the Board of Trade into the Earnings
and Hours of W orkpeople m tfie United Kingdom, VIIL :
Paper, Printing, etc,, Trades; Pottery, Brick, Glass and
Chemical Trades; Food, Drink and Tobacco Trades; and
Miscellaneous Trades. [Cd. 6556] 1913. Price 26*. 8d.

In this last volume of their inquiry the Board of Trade include
a number of industries wliich show considerable diversity of

456

THE ECONOMIC JOURNAL

[SEPT.

character ; but they have some features in common. ^They are
neatly all of moderate size, each group being estimated in the
report to have employed in 1906 from about, 300, 000 to 400,000
workpeople, or about 1,500,000 in all; and they possess socially
and industrially an imjx)rtance that is greater than their mere
size would lead one to suppose. Returns for the purpose of the
present inquiry were obtained regarding 557^000 workpeople, or
nearly two-fifths of the w^hole, and this number and proportion
compare very favourably with those of some of the earlier reports.
The proportion is lowest in the paper and printing group, and
highest in that (healing witli pottery, glass, and chemicals.

In these trades there are no cases of very^ low wages among,
boys, and only one (explosives) of very high ones. The same is
true, on the whole, of girls, though in a few cases their wages
are rather poor. Women’s wages are exceptionally good in one
case, procf'ss-block making, well above the average in the
musical instrument and the umbrella trades, and very low in one
or two others. Men’s wages, on the contrary, show very con-
siderable variations, which illustrate the differences in skill
bejbween different, groups and particular trades. Taken as a
whole, the printing trades employ as highly skilled labour as
almost any other in the country, and this is reflected in their
wages. Less than 4 per cent, of adult men earn xmder 20.9. per
week, and more than 12*5 per cent, over 50.s\ Other trades
showing high rates are pro(’.ess-b1ock manufacture., tlie glass bottle
trade, the making of porcelain, musical instruments, umbrellas,
and coopering. On th(‘ other hand, many comparatively low-
skilled oc'cupations are included in the Report, more particularly
in the food, drink, and tobacco trades, though the L west
averages of all are found in the miscellaneous trades, arhong those
employed in canal service, carting, and oil cake manufacture. It
should be reineinbered further that owing to the inclusion of
foremen and mechanics in the average, the rate of wage of the
ordinary W'orkpeople engaged in these trades is often below the
average rate given for them. On the other band, notably
in printing and bookbinding, the higher proportion of the men
employed in London helps to raise the general rate of wages,
since wages there arc usually higher than in other districts.

Another point to notice about this very composite group of
trades is the high proportion of w^omen and boys employed in some
of them. In the printing groups less than half the workpeople
returned were men over twenty, and nearly one quarter were
women over eighteen. The proportion of boys to men was

OFFICIAL PAPERS

457

nearly iVo to five. In the food group, men were a little over
one-lialf, and wpuien about one-fifth, of the total. In the
pottery and miscellaneous groups, on the other hand, the former
were nearly three-quarters of the whole. It should also be pointed
out that, except in a f(‘\v cases, the seasonal variations in these
trades arc not very marked. Hours of labour do not differ very
much from the general average, being 53‘6 per w’eek as against
52*9 in the building traders, and 53*2 in the engineering and metal
group. They a.re lowest in printing (52*5) and highest in food,
drink, and tobacco (51*1).

The wage returns are of various kinds. One return gives the
numl)ers employed and wages paid in l.he case, first, of all Work-
people working full time, and secondly, of all wor!:peoplc*, includ-
ing those wdio worked more or le.ss than full-time, in a

particular week in lOOfi. This is usually the last pay-w^eek in
September. Secondly, a return is made of the number employed
and wages pai ' m j,he last pay week or other weedv free from
disturbing causes in the year 1906, together with the annual
wage bill for that year. By dividing this latter by the average
number ^..mployed in these tw^elve weeks an estimate of the
annual earnings in the different trades is obtained.

C’ompared with other groups of trades previously reported on,
the difference between the average wages of full-timers and those
of all workpeople is, as a rule, very suiall indeed, and f\'here the
reduction is very slight, is probably accounted for by tlu^ fatd that
a certain number of workmen may hav(; worked for more than
one employer during tlic wecik, and been included in more tlian
one ndurn. In a few cases, as with adidt rmm in the pottery
grou]) as a wliole, and with several of the miscellimeons trades, tlu^
difference between the two is sufficient to show the existence of
an excess of short-time over overtime. It may be noted that the
average for all workpeopk^ is sometimes liigher than for full-
timers, whereas with particular classes of workpeople it is usually
lowTT. This is due to the higher proj)ortion of the highly paid
meiraniong all workjx’ople than among full-timers only.

In the animal earnings for the year that are given for all w^ork-
people, similar results are obtained. Annual earnings represent
a slightly larger weekly sum than do the full-time earnings of the
chosen week, and about the same as the earnings of all work-
people, in the printing trades. In the other gioups annual earnings
work out slightly, but only slightly, lower than either of the
weekly rates. Taking all the groups together they are the same as
for full-timers, and rather below those for all workpeople in the
No» 91. — voL.-yyiTi i i

458

THE ECONOMIC JOUBNAE

[sept.

: elected week. The actual average annual earnings w^e : Paper
and printing, d654 ; pottery, &c., £69 10^.; food, drink Jilid tobacco,
£48 105.; miscellaneous, £60; and the whole group, £66 10.5.
This represents weekly wages in the different industries of
205. 9d., 225. lid., 185. 9 ( 1 ., and 235. Id., or in all 215. 4d.

In considering annual earnings allowance in calculating the
weekly rate has to be made, on the one hand, for holidays, which
in 1906 varied from about 4^ working days in the year to about
13, and for wliicb very b'w of the work|)eof>le were paid. No
estimate is given of the average number of holidays in the year
either in particular grou])s or in the total. On the other hand,
no allowanc'c^ is made in the Iteport for \vork))eople totally un-
employed from lack of work or oiher causes. Moreover, tb(^
average number employed is decidedly below the maximum
number among whom these w^ages have to be divided — the
monthly average in each group being lower by some thousands
than the maximum employed in any month. Purther, the total
number engaged is likely to be greater even than this maximum,
since similar aggregates in different montlis are almost certain to
have been composed to some extent of different persons. Hence
it is probable that allowance for all these causes would make actual
weekly earnings to be somewhat less than the average as
calculated from the annual earnings.

Finally, seasonal tluctuations are found to be comparatively
slight in these industries, and very small intki( d in the misceb
laneous group. In the others they are sonic what uion*. marked.
Bet.wcu'n the best and worst months tlu'ro are variations of about
4 per cent, in numbers employed and 8^1 per cent, in wages in
the paper and f)riniing group, of about 1 and per c.tuit. T-esjVc-
tively in the pottery group, and of about 5 and 7^ ]j(^r cent, in the
food, drink and tobacco group. In some branchi^s of the latter,
indeed, there are very marked variations between the maximum
and minimum wages bills, but in otluirs fluctuations are almost
non-existent. Moreovei-, in some casi^.s, the steady improvement
in tradi‘ during the year, by increasing the numbers employed
during the latiu* months, made the seasonal variation to appear
more marked than it really is.

No attempt was made to comjiare the ‘results of this enquiry
with those obtained in 1886, the material available for the earlier
period being either inadequate or hot of a character to admit of
an accurate comparison between the two years. The "Report as a
whole forms a fitting conclusion to the series, though such a
necessarily miscellaneous collection of trades cannot be treated so

OFFICIAL PAPEIIR

459

1913]

satisfactol^^ly as the more homogeneous groups. Nevertheless,
whilst certain detailed improvements miglit be suggested, the work
taken as a whole has been excellently done.

N. B. Dearlis

Report jor 1912-13 on the Administration of the National Insur-
ance Act. Part 1. {Health Insurance). [Cd. 0907. J 1913.
Price 2s. 9d.

To be reviewed.

Report of an Enquiry by the Board of Puide into Working-class
Rents and Retail Prices^ togeiher with the rates iff wages
in certain o. apations hi industrial towns of the United
Kingdom in 1912. 1913. [(!d. 0955. J Price is. IIJ.

In continuation of the similar enquiry made in 1905. 'I'o be
reviewed. •

Royal Comiv’ssion on the Poor Laws and Relief of Distress.
General Consolidated Index. Appendix Volume KXXVll.
1913. [Cd. 5443.] Price a<;'.*7d.

The extraordinary voluminousness of this Commission’s pub-
lications is strikingly illustrated by the fact that tli.; general
index runs to l,t)80 double-column folio pages.

Annual Report of the Board of Agriculture on Small Holdings
for the year 1912. 1913. [Cd. 0770.] Price 5d.

A REPORT by Mr. E. J. Cheney of progress made. The chief
feature of this issue is a series of detailed reports relating to some
of the most successful individual small holders.

Return showing annually, for each year since 1909, tn a sum-
marised form, the imported quantities of certain grains,
meat, and sugar; and also the countries from which these
supplies of food ilwre derived. 1913. [H. of C. 93. J Price

2d.

•

An interesting return showing very strikingly that the relative
importance of the jlifferent sources of supply of various foods,
while the total annual imports are fairly steady or steadily pro-
gressive, is subject to wdde fluctation. The almost complete

r T 2

4C0

THE ECONOMIC JOUBNAL

[ftfePT.

cessation of im[)orts of beef and mutton from the UnjCed States
is noticeable.

Return showing (1) the Aggregate Gross Liahiliti^s of the State,
the Estimated Assets, and the Exchequer Balances at the
close of each Financial Year from 1835-6 to 1912-13, and
(2) Expendilure (diarged Annually dming that period against
the Pnhlic Revenue on aecomit of the National Dehl, and
oilier Payments con'iiected ivith Capital Liabilities. 1913.
jCd. 6798.] Trice %/.

Minnies of Evidence taken by the Conimitiee on Irish Finance
with Appendices. 1913. [Cd. 6799. J Price 2s.

In response to ^.nntiinied Parliamentary pressure, the evidence,
given before this Ccniuiiittee in 1911 by such of the witnesses who
ga\e their consent to publication, is now published. It does not
a])pear to contain any sensational matter, and is largely concerned
witli teclinical detail relating to the manner of calculation of the
iiiiiount. ot revenue, attributed to Ireland.

Banking and Railway StaiisUcs, Ireland, i)eccmher. 1912.
19i;^. 6836.j Price 4Jd.

TiJE annual summary prepared by the l)e[)ar^ment td Agricul-
ture.

The Indian Financial Statenicni and Budgd for 1913-4, and
Discussions thereon in the Legislative Council e/ the
Cover nor- General. 1913. [H. ol (h 130.J Prjce 2.v. Gd.

8iu Guy Plkktwood Wilson’s last statement. He lias taken
the ojitxu'tunity to state his position in regard to the Gold Mint
question, a toj)i('. also dealt vvilii by several sj>r.^akers in the
subsequent discussion. There is little else in this stateineni of
novelty or outstanding economic interest.

Statement Exhibiting the Moral and Material Progress and
Condition of India during the Year 1911-2 and the Nrne
Preceding Years, Forty-eighth Number, being the Fifth
Decennial Report. 1913. [H. of C. 220.] Price As. 6d.

Evkpy ten years the annual Moral and Material Progress
Eeport blossoms out to more ample proportions than usual, and

OFFICIAL PAPERS

461

191S^

presents a\synof)si8 of the wliole decade, instead of flie sin^^lc year
prerc ding. The present report ^ollows well-accustomed lines, and
provides a valuable and very complete work of refc^rence in n'gard
to recent progress and events, particularly in those s}>hcres of
Governmental action which are financial or econoinie. It is
largely a summary of the very great number of other official
re|>orts, beneath which Ihe Cxovernment of India is accuslometl
to bury its activities, and docs not lend itself to any further
summary. As its value is primarily that of a work of reference,
unlikely to be read right through by anyone, the tiibsonco of an
alphabetical index somewhat diminislies its usefulness.

Tlcports by His Majesty's Aqcal and CousuUCenera] (m the
Fmances, A jannisiration, and Condiiiou oj Effypi and the
Stida.i in J912. 1913. [(‘d. 6682.] Trice Id '. '

Ijoiin IviTCimNia? defends his Five Feddan huv, designc'd to
give profe(^Uoo lo tlie small cultivator of iiv(' IVddans and under
from exprofuiatioTi of his land, house, and farming utensils for
debt, against various criticisms that have been lev(‘,l)ed at if. A
(V)mmission is now af W(»rlv inv(‘stigaling fbe actual degret* of
indelitednc'ss of tb(‘. smaller laiidow®ners. 'Tla* laying of tlie last
stone of the Assouan dam alTords an opportunity for taking sto(‘k
of tlie general ixisition with regard to irrigation.

Report on Bovnties ami Subsidies in respect of Shipbinldimj ,
Shipping, and Navigation in Foreign RountriiS. 1913.
[Cd. 6899.] Trice 5d.

A VALUABLE work of referenci‘ relating to tw(mty-six foi'eign
couniries,'based on information obtained by tlie Foreign Oflic(i
at the request of the Board of Trade. It ap}K^ars that dir(‘c‘t.
money subsidies are granted to thc^ greatc^st extent by Jafian
(-£1,100,000 altogether in 1911). After Japan comes I'rance
(£1 ,335,0t)0 in 1911 , apart from postal subveni ions of £1 ,105,000).
Although various special privileges in the matter of Customs
TaritT and vuiiway rates are granted to shipbuilding material in
Germany, subsidies for postal services amounting to £*350,000
annually are the onl}^ direct money jiavmcnts granted.

Copy of the new United SMcs Tariff Bill, with Coniparison of
the Proposed and Existing Rales of Uuiy. 1913. [Cd.
6771.] Price Ts.

The section of the Bill relating to Incojne Tax is also given.

462

THE ECONOMIC .TOUBNAL

[sept.

Report of the Ccnumissiomer of Corporation fi on me Steel
Jiulastry. Part 111. Cosf of Production : Full Report.
Washington: Governnient Printing Office. 1913. Pp.
xxxiv + 569.

The earlier Parts and the preliminary draft of this Part were
reviewed in the Economic Journal, June, 1912, p. 323.

Report of the (Commissioner of Corporations on the International

Harvester Co. Washington : Government Printing Office.
1913. Pp. xxiii + 381.

Sunnnary of the above Report. Wasliington : Government •

Printing Office. 1913. Pp. ix-i-37.

The following <]uota(ions are from the official summary of
the “essential fealines " of lliis Trust as disclosed by tlie investiga-
tion : -

“A substantially monopolistic positicai- 85 per cent, of the
total output— in iPe liarvesting-macliine business proper , at the
^ beginning.

Jdie organisation of the comlunation lerininated a. long
period of sev(‘re, but by no inUans destracli\e, c()in})etition among
tlie concerns nuTged.

An al^seiKH'. of important over-ca[)it,disation. Substantially
90 per (*ent. of the original $120,000j)00 ca.pital stocb was
cov(‘.red by tangibU^ jiroperly and working ('.apdal. 'There wais in
a,ddi(ion a ('oiisiderable real goodwill.

Ac(pnsilions of t'onipetdors and exOmsions into niwv lines,
until to-day the company is also an important factor in certain
other brances of the farm-machinery industiy.

Low rat-es of profit in early years, partly owing to imperfect
organisation and internal jealousies, but much higher rates in
recent years, averaging about 12A per cent, in 1909-1911 on net
assets (exclusive of goodwill) as estimated by the Bureau.

Prices of machine's sold in foreign markers generally higher to
retailer and farmer than in Lnited States, but L% Some cases a
lower margin of jiroht in exjxirt trade.

Low ma,uufa(*,turing costs of luu'vt'stmg machines comfiared
with the average costs of independ(‘Lts ; an elaborate selling
organisation and ability to grant extensive credits to [lurchasers.
These advantages diu' to In-rge volume of business and sujierior
/inancial resources.

Extensive use especially in early years of objectionable com-
petitive practices, e.g., the exclusive clause in dealers’ contracts

1913]

CUERENT TOPICS

468

(lat(T abai:^oned), monopolisation of dealers, “full line forcing,”
discriminatory price concessions, attempted control of retail
prices. These methods less extensively practised in recent years,
but still the source of rnucli complaint.

Monopolistic position of the International Harvester Co. in
harvesting machines thus far substanlially maintained, while it
now controls a considerable and increasing percentage of thf',
business in new lines.”

Annuairc de la Legislation dn Travail, 15^ Anriee, 1911. Brussels :

Libraire A. Denoit. 1913. Pp. xviii-ell60. Fr. 8.

The Belgian Ministry of Labour’s annual summary of labour
legislation in all parts of the w’orld.

CuPRENT Topics.

A coRREsroNDPNT who is interested in the market for Cleve-
land \V:irriiT»t Iron writes as follows with rc'gard to the rumours
which iiavc recently appeared in the various trade papers : —

“The trade in Cleveland pig iron is in some respects unique,
and in the form of a Warrant Store provides at present the only
free market in pig iron in the wwld. This fact, combined with
the w'ell-^established quality of the iron, gives it a position in
the w^orld’s markets which the actual ontjnit alone would hardly
justify. The present suggestion to form a central selling agency
for marketing Cleveland pig iron is not the first attempt which has
hec'ii made by the Ironmasters on the Tees to co-operate and
cojitrol mnongst themselves the selling price of their iron, and it
does not ap])ear at the moment of wilting that this particular
proposal is likely to succeed any better than its predecessors havii
done. So far as the present proposals are known, they have a dual
object, namely, to enable makers to adopt the policy already in
vogiUB on the Continent of setting up a single body wdiich would
control the selling price, and also, as a necessary consequence of
this, the closing of the Warrant Store and the end of speculation
in Warrant Iron. |

“It is difficult to decide diiow' far it is possible to justify such
a proposal on the broadest (onsiderations. But there can be
little doubt tha^ competition amongst various makers has left at
times no profit to the majority of them. If it w^as wdsely used,
therefore, such a scheme w'ould probably be an advantage to the

4^1 THE' KCONOMIC JOURNAL [SEPT.

liiioducers of Cleveland pig iron. Nevertheless, amongiSt a con-
siderable portion of the ironmasters the idea of controlling prices
was only looked upon with favour because it rei)reRented a means
by which to bring to an end the Warrant Store, and it was this
factor in the situation which led many, when the scheme was first,
propounded, to believe that it would be successful.

“It is an interesting question as to whether a large store of
iron or any other commodity for wlucli warra»\ts are held by the
speculating public is over a long period an influence for low or
high prices, and it is at least questionable whether the view, so
widely held, that it is on the whole a ‘bear’ factor, can be
supported by actual facts. If the sclicme is successful it will
mean that the dislike of the Warrant Store has been the pre-
dominant factor in bringing about this result; wlicreas, if, as
appears more probable, it fails,^ this will mean either that
some other method of closing the Warrant Store has horn
found, or that th(' advaniagt's offered to th(' ])rodn{*er have no!
been sufficient to overcome th(‘ inherent dislike which the English
manufact urc'r feels (in a much grea.ier degree^ than his Ck)ntiiiema)
comj)el ilor) for tla* comj»lical<‘(b procedure and rt^sh'icliou of irrh*
vidiial frc'edom nhieh is m'cessarily involvt'd.”

dhiR receni General IGeetion in llollaiid has (*n(icd ii: a se\cre
defeat of the Protect ionist pr()|K)sa.ls. 'Fowards tlie end of 191th
the Minister of E’inance in the Clerical Government, which has
since fallen, hronght forward ^J’arilf proposals involving the
taxation of a groat mimher of artieh^s at rates varying fjom
d to 15 per cent. But th(dr defeat at the polls leaves Holland
a virtually Free dVade (*ountry ; and Great l iritain’s only (V)n-
timmtal ally in this policy does not seem 1ik('ly to abandon
it in th(‘ near future. Quite apart from the merits of the
question, it seems (wident that the pre^sent is a time exceec!
ingly unpropitious politicalh' for Protectionist prop^)Siils. In this
connection some ]>regnant remarks of Sir David Barbour’s deserve
qnotatioTi : “The fall in juices (after 1873) ^was unfavourable to
Free Trade, and gave a great stimulus to Protection because the
persons who were suffering frojii the fj?,Il were prepared to support
any device that promised to remove their immediate difficulties,
and it is beyond doubt that the adoption of a Protective System,
in addition to raising the prices of the j)rotected articles, tends
^ Since the above was written the scheme has definitely failed.

1913]

CURRENT TOPICS'

465

also to l6wer the general Purchasing Power of the Standard of
Vciiine, and io mitigate the eflects of Apfu^eciation. The rise in
prices which we are now experiencing has the ripposite eff'ect, an<]
leads the classes who feel their position growing worse to cry out
against Protection. Tlie political agitation in England in favour
of what is called Tariff Reform was begun at a time which was
unfavourable to any chance of success which it might have
poss(^ssed under different conditions.” Thus, it may not be loo
fantastic to maintain, that Mr. Pliamberlain’s policy in South
Afri(‘a, in so far as it led to an increased output from the mines,
helfjcd to set forces moving wliich were s\e\] cakailated to bring
his other policy to nothing.

A TRAim UNION RANK OTi co-operative lines has been (‘st.Jilished
in Nicholas Lane, T jombard Street. The working capital is
.€100,000, and^profits will he distrihuted among^ the customers.
The bank pro|H)s« ^ to pay from 0 to i per cent,, on deposit ac(*ounts.
“The suggestion,” says the Thnrs, “first arose out of ibe difficulty
experi( iiced by trade unions in securing loans to tinanc'i' strikers
during the epid('mic, of lahour unrest a yeai* ago” : and tlie bank
chiefly hopes to tbriv(‘, it seems,* on the business of the 'J'rnde
Pnions, whose annual turnover is said to amount to €5,000,000.
The exfieriment is an interesting one ; but it appears ^rlnui facie
to be exceedingly ill-advised. To set np a bank, tlu‘ customers of
wliich are likely to withdraw deposits and recpiire advances in large
amounts at the same time, runs counter to the funda, mental
principk'S of banking. If, after paying expenses, the bank is to
afford uj) to -1 ]ier cent, on deposits, its funds cannot be emfiloyed
in the most gilt-edged securities. Tts ability to meet the enormous
strain which will fall on it during the next epidemic of stiiki^s
must he highly doubtful. Fortunately the Parliamentary (knn-
niitlee of the Trade Union Congress, which has h(‘en di^aling with
the matter, is not yet formally committed to the scheme.

Our South African correspondent writes (April, 1913) as
follows : — The most|important economic question in South Africa
at the present time is that of taxing land. There are two distinct
issues. In the first place thexe is a movement to transfer municipal
rates from the capital value of land and buildings — the present
assessment — to tlw unimproved land value alone. The munici-
palities of Johannesburg, Pretoria, and most of the small towns
in the Transvaal have passed resolutions in favour of the change,

466 THE ECONOMIC JOCBNAL [SEPT.

and an attempt was made in the Provincial Council last’ year to
pass a Bill authorising any municipality to adopt site va/ne rating
if it wished. The Bill was rejected, but a Commission was
appointed to consider this question, along with others aflfecting
local goveinment. The Commission is now sitting ; but there
will be a new Provincial Council to elect at the end of this year ;
and as the redistribution of seats which the constiiiition requires
'will favour the towns, a strong effort is likely to be made to capture
the Council for the reform in rating. The Labour party is
om}>hatic.aIly in favour of it. The question is an especially acute
one in Johannesburg, because the rapid growth of the city has
put enormous profits into the hands of township companies and
other land speculators, and the public feel that they may fairly be
made to contribute a larger share of the town expenses. The
chief difficulty is that the more successful sf>eculators are those
wffio have alrea(\v sold out, so that many of the present land-
owners and shareliolders in township companies fiave made no
excessive ]uofits, or possibly have made losses. There is no diffi-
culty with regard <o assessment, as unimproved land value and
improvements are assess('d sef)nrately already ; in Joliannesburg
the values are: land, X‘17,1 16,t)00 ; im]>rovements, X]6,458,000,

The w’i(^r issu(‘ of tlu' taxation of country land is also before
the jvublic. Nearly all the valuable' land in tlu' Cnion of South
Africa is private iiroptaiy. The farms \\ei(‘ originally of 5,000
acres and u])\vards, and though many have Ix'en divided th^y are
still for tlie most |)art exeessivcly larg(\ and in the hands of an
iin progressive type^ of farmer, who merely k(^ef>s a tVwv cattle and
blocks the way for improvcmK'nt. Th(*re is a very large ’class oi
landless country folk, mostly Dutch-speaking. The present
Government is supported chiefly by the landowning interests,
who of course opjKxu' land taxation ; and though immigration wmuld
raise tlie \aliio of land, are opposed to immigration, partly from
conservatism, and partly from fear of losing their political
supremacy. The landless country people mostly vote as their
richer neighbours — the s(piires — wdsli, and W’oiild need much
education before they c^ould be persuadfxl thi?t a land tax would
not fall on tenants aaid laboun'rs. ^JJie Unionist party (the official
OpfKDsition) have ado{)ted land taxation as part of their programme,
but are lukewarm about it : only the Labour party is active in the
matter, and the Labour party is still so v(Ty small that nothing
is likely to be done at present. Still, public interest is growing:.

[1913

CUBRENT TOPICS

467

The Madras Economic Association, which has for its object
tlie promotion of the study cf Economics with sptKdal reference
to Indian conditions, is now pursuing its activities along two
lines : firstly, by deputing young men who hold the Eesearcli
Scholarships of the Association to collect facts at first hand ; and
secondly, by investigating how far the ordinary theories of
Economic Science are applicable under the elementary conditions
of distribution and the different psychological data found in Jndia
The following highly interesting topics have been taken up for
sf)ocial investigation at jnvsent : (I) Village Statistics; (ii) Indian
Modueval Guilds; (H) Indian Hanking: (-1) Wages of the labour-
ing classes in South India. Fellows of the Eoyal Economic
Society wdll wish the Madras \ssociation great succt‘ss: and will
be much interc cd to lu'ar the n'sults of th(‘se various investiga-
tions. The Association is under the presidtmcy of Lord i.Vntland,
Governor of Madras, and Mr. S. S. Iyengar and Mr. M. ll.
Sundarani lyPi are its secretaries.

Appoint etc. -Mr. (f. Findlay Shirras, M.A., has been
appointed oi the Minlo ('hair of Econonii(*s iji th(' rniversity of
Calcutta, on a salary of t'l,()()0 a •year, in succession to Professor
Manohar Lai, who has resigned. Mr. Shirras is a nu mber of the
Indian Educational Service, and has been lalcly (‘inj)loyed on
special duty in connection with the Indian Price's l^nquiry.

Dr. A. L. Bow ley has, in vi(wv of liis increasing work at the
London School of Economics, resigned the j)osition of Professor
of IMal hemalic.s and Economics at University College, Heading,
which he has held for (hirteen years. H(' is siicc'cc^led at Heading
by Mr. S. B. MeJ^aren, of Trinity College, Cambridge.

Mr. Arthur Greeinvood, IhSc., .Head of IIk'. Economies
De).)artnient a( Huddersfi(d<I dVehnical College', has Ix'en aj)pointed
Ijectnier in Eeoiuunics in the Uriiversily of Leeuls. Mr. Green-
wood is succeeded at Huddersfield by Mr. G. P. Carter, M.A.,
Assistant Lecturer in the Universilv College of Wales,
Aberyslv\ yth#

Mr. Gomad Gill, M. A. (Leeds) and B. A. iCannh.), has l>een
appointed lecturer in Economic History in the'. Qiu*e'n’s University,
Belfast. Mr. Gill has been on the staff of Manediester University.

Mr. David .Kemp, M.. A.fEdin.), has be^en elected to the
Gartsieh' Scholarshif), founded for the encouragement of the study
of vsubjects bearing on commerce and industries, in the University
of Manchester.

RECENT PERIODICALS AND NEW BOOKS.

Economic Rcrictv.

July, 1018. Famine Uclicf in India. 1). A. Bauki:r. New Ideah
in Mi)dern Baninc^w. B. S. Towniioe. An account of tli(‘
troyiiuent of tlicir cnjployees by Messrs. J. Crosfield and Sons,
of Warriiigton.

Statistica] Journal.

M.^y, 1013. (ileanintjH from ihe Census of Production Report.
A. W. Flux. An important paper containing numerous
inicn’iicos aiid genera iisations of the highest onterost. The
Tendencij of Children to Euler ilieir Phithers* Trades. S. el.
(OiACMAN and W. Aiujott. On the basis of an investigation in
Ijiuieasliire, the tendency found to exist in a higli degree.

June. 1018. The Census of Ireland, 1011. Sir W. J. TnoMrsoN.
Workincf-elass H(mseh(ddH in Rendhig. A. 1j. B^wlly. ,/Vn
ini('r('sti?ig (‘xamjde of the method of samjding in social iinesii-
gatioJi.

eicLY, 1018. The Trade of ihe British Empire. S. lh>sENiiArM.
^rh(‘ aui.TiorV o])ject is to invc'stigate the trade re]afiont> of lih(‘
parts of the, Fjm])ire to <au‘ anotlier and of iiie Fjmpirc' as a,
wliolo to foreign (*ountries. The Estatts of [he (^alleges of
Oxford and their manageonent. Jj. L. Pun'K. Suminarv (d’ a
pap{'r read heiore tlu* Hurvf’yoJ"^ Institution. Reptyrl oj the
E])erial (^ommittee on Morhidity and Morinlily Statistics in
the Vniied Kingdom.

Rankers' Magazine.

Junk, 1018. l^roporiion of Capital and Reserve lo Drposiis of
Banks in (Beal Britain and Ireland during 1012. Sonu^ interest-
ing (‘.omparisons are given with tiie ihinks of h>ance and
Belgium. Crowth of Leading Savings Banks, 1. A. 11.
(liRsoN. (ilnsgow is dealt with in this issue, Manchester in
July, and Edinburgh in August.

J[TLY, 1013. The Autumnal Drain of Sjiccie. The changed charac-
ter of the drain is vvtJl brought out. The Co'omionweaJlh Bank
of Avstralia. A brief accx)unt of this new institution.

August, 1018. Recent Gold Coinages of the World. Transactions
of the Bank of France for 1012. Report of the Imperial Bank
of Germany for 1012.

Women's Industrial Nars. ‘

July, 1913. Extending the Trade Boards Act. J. J. Mallon. By
a “Member of all the Trade Boards so fur established,’*

SEPT. 1913] REaBNT PEmODIC4LS AND BOt)KR 4G9

Clare Market Re view , ,

1913. PotIh and Docl^: Douglas Owen. Statistics and
Social Problems, J. W. Nixon. Some Branches of the Briiish
Jiihrary of Political Science, VT. The Collection of Publica-
tions of Local Governwent Authorities. Kenneth Cotton.

Bullclin of British Library of Political Science.

July, 1913. Biblbupaphy of John Elliot Cainirs.

S oc iologi ca l 1 1 e r i e .

July, 1913. Scieniipc Manage went . J. A. IIoeson. Mr. ITobHoii
calls attention to certain “huirian (lisu(l\ anta^cs in these
methods. Notes on Social and Economic C^onditions in Greece.
Maurice S. Thompson.

Scot tis h 1 J istorical R e r icir .

July, 1913. The Trade of Orkney at the End of the Eighteenth
Ceninry. W. U. Scott. A paper read at the Economic
ITistor;)' ction of the International Historical Con[jr(‘ss.

Quarterly Journal of Economics (Harvard).

May, 1913. The Plan for a Compensated Dollar. l'\ W. Taussig.
An important criticism of Prof. Fisher’s proposals, on various
grounds, but mainly becaiisi? the adjustnieiit bc'-twecui pri(*es
and the volume of currency is not so immediate and automatic
as he seems to suppose. The Tabular Standard hi Massa-
chaseits History. Willard C. Fisher. An inksresting history
of attempts to regulati^ the value of a dc'prtaaaied not(‘- issue' in
the latter half of the eighteenth century on a system closely
resembling the tabular standard. The Dominance of the
National Union in American Labour Organisation. George E.
Barnett. Tenancy in the Soulhern States. Benjamin H.
TIibbert. The Economic Possibilities of Conservation . L. C.
Gray. Schumpeter's Economic System. B. G. McCuea.
Uailivay Hates and Joint Cost. A. C. Pr(U)U and V, W.
Taussig. A brief rejoinder and counter-rejoinder in this
controversy.

Arnericav Economic Retiew (Boston).

June, 1913. Judicial Interpretation of the Minimum Wage in
Australiaf M. B. Hammond. Pensions as Wages. Albert df-:
Hoodk. Pensions should be regaided us a part of real wages.
The Rise of the Iron Moulders' Internaiional Union. H. E.
Hoagland. Tie Piates and Practices of Express Companies.
Artiiur S. Field. The Equation of Exchange for 1912, and
Forecast Irving Fisher.

Political Science Quarterly (New York).

June, 1913. The Proposed Sugar Tariff. R. G. Blakey. The
Disintegration of the Tobacco Combination. A. C. Muhse.

47G

THE ECONOMIC JOURNAL

[sept.

Annals of American Academy (Philadelphia).

May, 191B. A series oi articles on Co uni y GovcrnmeAt in the
United States.

July, 1913. The general subject of this number is the Cost of
Living » Part 1., on Wage Standards, includes articles by
Prof. ISeager, Prof. M. B. ITaminond, and Mr. Bcott Nearing,
proposals for a niinimurn wage receiving principal attention.
Part 11. deals with Family Siandiuds, i.c*., Household Manage-

r meni; Part III. with Public Services and Control; and Part IV.
with Concrete Measures for Reducing Cost of Living.

The Journal of Political Economy (Chicago).

May, 1913. The Relationship of Scientip,c Managemejit to Labour.
John P. Frey. Criticises “Taylorism'' on the ground that
“it seems to give to considfuation to workmen more as units in
production than as human beings.’' This number contains two
other articles on Scientific Management. Subsidised Un-
employment Insurance . 1. M. Kubinow. Mainly based on

Mr. Gibbon’s recent book. Commerce and Industry in Spain
during Ancient and Mediceval Times. Leon Av,i)zrooni.

• June, 1913. The Spirit and Social Significance of Seieniific
Management. Mokris Ij. Cooke. Applauds “Taylorism" on
the ground that- it “means the individualising of the workers,
and herein lies the heart of its social signifit'ance." Security
Prices and Interest Rates in 1910 12. Wesley C. Mitchell.
Brings uj) to date a numlx'r of valuable tables, publislu*d in
the same Journal in 1910 and 1911, relating to American
Stock Exchange' securities. Certain Changes in New York's
Position as a Financial ('entre. E. M. Patterson. An
interestiVig discussion of the relation between the country banks
and ibose in Nc^w York, leading up on various grounds to the
general conclusion that “the country is less dependent on
New York for cash than in former ^^ears." Beet Sugar and the
Tariff. Roy G, Blakey,

July, 1913. The Thirteenth Census. H. Parker Willis. This
nund>or includes throe articles on Scientifc Management ,

Bulletin of the IJ.S. Bureau of Labour (Washington).

No. 112. Decisions of Courts and Opinions affecting ijabor, 1912.

No. IM. Wholesale Prices, 1890 to 1912.

No. 115. Retail Prices, 1890 to lA'bruary, 1913.

Re rue d' bleonomie PoUtigue (Parish

May-^June, 1913. I j'Australic ct le Regime travailliste. Charles
Schindler. ^

July -August, 1913. La hausse aciuellc de la monnaie, du credit
et des prix' — comment y remedier. Irving Fisher. Comment
expliquer Ics mom'semenis de la population humaine. • Cii.
Turgp:on. Le Regime douanier colonial. E. Bernard. With
reference to the French colonies. G rapivques relatifs a la
haus,se de Vinierci. Cn. Rist. Chiefly relating to French
securities. La latte dc la voir ferree ct de la voic d'eau. M.
Porte.

1913]

RECENT PERIODICALS AND NEW BOOKS

471

Journal des Econo mistes (Paris).

Ma\, La cmc dii marche a terme et la propoHiiiun de Monaie

devant Ic Parle went. I. Tchernoff. .Deals with a recent
legislative attempt to re^gulate speculation.

June, 1913. Les diversen jormen de la niutuahte. Yves Guyot,

July, 1913. Les Conrptes des chemins de fer feddravx en 1912.
Ph. Favarger. An account of the financial results of the Swiss
railways Liai d' esprit sijndicalisic . F. Garcin. La Crise
sardiniere ct la rcccnle sentence arhiiralc. E. Guuault.

L ’ Economist e Francais ( Paris) .

June 14, 1913. La Revision des (Umrs des Valears Mohilieres.
Paul Leroy-Beaulieu. The first of six articles on the depre-
ciation of Fnuich securities, continued hi the isrues of June 21,
28, July 5, 12, 19.

July 26, August 9, and 10. Le Situation jinuneivre et les projeis
d'itnpots nouveaux. Paul I iU.RoY-BEAULiEU.

Revue Econo niiquc Internationale (liraissels).

iVIay, 1913. A sf^ries of articles on French colonial development in
North Africa.

June, 1913. Le Prohlhne de la Colonisation da Congo Beige.
AIoulae. T. L'fshnn.is'}ne et la (kdonisation de VAfrique
Centrale. E. Cammaerts. Les Finances Bresiliennes. G.
Hausser. Les Chemins de fer^ud-anieticuins^ 1). Pfctor.

July, 1913. L'lndustrie ('otorinierc. Sir C. Macara. A brief
study of a very general character. Jjc Budget de 1913 en
France. Yves (Iuyot. Lc Pmhlewe bndgetaire V expansion

des forces econoniiques de la France. Albin IIuart.

Le Muscc Social {Memoircs ct Documents) (l^aris).

JMay, 1913. Le Sgndicalism>e frminhi dans les Industries textiles
cn Angleierre. Mlle. A. Tougard de Boismilon.

June, 1913. L'Etat piescni da Hyndicatiswe mondial. Paul Louis,

Archiv far Sozialwisscnschaft und SozialpoUtik (Tubingen).

IMay, 1913. LohnabzUge fur Wohlfahrtscinrichtungen. P. Lotmau.
Versuch cincr Soziologie der bildenden Kvnst. W. Hausen-
stein. Katber vague generalisations on the relation of Art to
the social and economic outlook of the time. Der pre/ussische
•Wohnungsgesetzeniwurf. II. Lindemann. Der Allgemeinc
Judisciic Jlrheitcrbund'" znr Zeii dvr rassischen Revolution
(1904-1907). 1. An anonymous article, continued in July, on a
subject about which little has been known hitherto. Die
Arbeiterversichehiug in Russland. F. Lifschitz, Der Anteil
der Frauen an der Fabrikarbcit in Japan. E. Simon (of
Nagasaki).

July, 1913. Die Elernente des Wirischaflslebens. Werner

Sombart. By^“ elements ” Prof. Soinhart means those essential
cliaracterisi j(;s without which “monschliche Wirtschaft nicht
moglich ist.” Die logischc Struktur des historischen Material-

472

THE ECONOMIC JOURNAL

[sept.

iiimus, S. E. Altschul Elne Untcrsvchung iibcr die
Zukinijt den landiriiiHciiaftUchcn Groanbctricha, 11, Lkonhard.
Dio Kindcrarbeit hi Oeaicrrcich 1. W. ISchiff. uie Sozialc
GcscJiichte dcr Schulth ciss-Brauerie, E. Lenz.

Schmoller's Jahrbuch (Munich).

Taut I., 1913. This Journal is now issued in a new dress, and
Schinoller’s name for the first time appears formally in the
title. DcatHcldand and England anf dem Weltmarkie, Karl
Kathgen. Emphasises tlie community of interests between the
two countries, and discusses the nature of England’s misunder-
standing of Ctorman competition. Neunierkanlilismus mid
irirtschaftlichr IniercaHcn-nrganimiion. S. Tschiersciiky.
Eihischer Tndividualismus imd so;:iaIe Reform in Englo7id. PI.
Lfa'V. a study of the national characteristics underlying
modern social movements in England. Die bevorstehende
\Vohnmign(je}<rt::gi'hmig in Prrusscii und im Eeiche. G. Seibt.
Die ArbcHHteilung und die Beschdftigung minderwertiger
ArheiUkrdfte in dcr modernen Grossindusirie. C. PIeiss. A
study of the effect ot large scale organisation of industry on
tlu^ opportvhiities for employment of workme'* of sub-normal
(efficiency. Dcr Kanipf gegen Fleischnoi mid. Flcisehteuening,
K. Waltemath. Die russische Landwirischaft und dcr indus-
triellr. Proiektionismus, G. von 8tryk. Die aufomatiHche
Kontrollc dcr PrcUpolitik staatlicher Monopolgeselhchaffen,
W. Moller. With special reference to the example of a possible
G(irnran Government monC)poly of ])etroleum. Der devii^che
Zolltarif von 1902. J. W. Hollander. Its origin and hirtory.
Continued in the next two numbers. Daa Petroleum naoiopol :
ifcine J^oi ivendigkeit , Mdglichkeii und O^ganifioiiim, ().
SeiiNEiDKii. Neuere Arheiten iiber Geldivcrivcrdndn ting tend
neuere PreiHsteigerung . Gustav Sohmoller. A rt‘view of I*rof.
Ashley’s recent j^amphlet and ot Mr. Hooker’s pajau' in the
Statistical Journal. liber die Wirtf^chaftfientwicldung der
Karolingerzeil . P. Sauder.

Part II., 1913. Die FeHiseizmig einlieHliclier Prdse fur Wu'^nn und
ArbeiialciHt ungen, H. Punou. Die Grundzuge der ,h7iliscJien
Naiiomdver.sicherung vo7i 1911. G. Hutjl AUere dcidttcbe
KaricUe. W. Stiede. The instanccis cited range from 1498 to
1836. Dir periodiaclien Druek^chriften Deuificlitatide. P.
St(^*klossa. a statistical study. Die winHchafiliche Lage
ItalieuH in der Gegenivart. E. Wilmersduerffkr. Die
Hcliulze-DelitzscJiHchen Gc7iossenscJtaften in Posen ah ein
Bolhverk des Dcuischttnns. H. Crugek. Dh Preassiseken
Biaatseisenhalmen, li. Melchior. A (*ompari.son wuth the
Pennsylvania Kailroad and the Jjondon and North-Western
liailway. RussiHch-Turkesta7i und die Te^ndenzen der beutigefi
russischen Kolonial-politik. O. Hoetzsch. Continued in the
next number.

Part PPL, 1913. Die Hetze von Alexander Tide und Ko7isorfe7i
gegen L%ijo ijre7itano. Gustav Sciimollek. An eloquimt and
generous tribute to the character and influence of Erentano,
who has emerged victorious from the extraordinary series of
lawsuits in which he was involved during 1912. Brentano’s

1913]

RECENT PERIODICALS AND NEW BOOKS

473

defence of trade-unionism brought on him apparently the enmity
of a certain section of German employers, who put up certain
hack*writors, and especially a man named Tillc, to destroy
Brentario's reputation for fair and honest dealing with questions
of fact. Brentano fought these voluminous attacks in the
Courts, who have completely upheld him and have ordered the
confiscation and destruction of the slanderous attacks upon his
reputation. The controversy turned to a certain extent on
some questions of fact relating to the position of trade-unionism
in England, and the association of detractors called to their
assistance Lord Claud Hamilton, who seems to have madS
statements about the leaders of the men in England and other
matters which were based on very insufficient knowledge.
Other railway directors. Prof. Sclirnoller reports, could but laugh
and wonder “aus welcher Arcdie Noahs,*’ Ijord Claud could have
emerged. Prof. Schinoller has hdt that he coind not stand aside
when an old and loved comrade, with whom, however, lie has not
always L'^t/id himself in agreement, has been so grossly
attacked. The article do(\s honour to the spirit of the academic
world in Germany. Di^ HozialwissenHchafiliche Grundlage
nnd Strul{f}n- dcr Malihuaianischen Bc'VoVkcrungsleJirr . W.
Kojit.er. VorgcFdhichte den Finanzsyfitenis iwn John Law.

F. K. AIann. Zur FinanzgCHchichte dvn Ruhrhohlen-Berghanon.*
H. ScuAciTT. Die Wertzuwachsfifruer in Literainr nnd Gesetz-
grbufi;-. W. Gerloff. A review of the very voluminouB
recent German literature on this subject.

Annalen fiir Sozialv Politikund Gesetzgehnng (Berlin).

Parts 5 and 6, 1913. Hoziale Theorie drr Verfeilung (pp. 82).
Prof. Michael Tuoae-Baranowsky. Zur Frage dvr facMichen
AushUdung dor Arbeit erinnen von )iozi(d'polifis&hc7'i Gcrichts-
punhten. Bora Landk. Die Einwandcrung nach Australien.
Ernst Schultze.

Zcitsehrifi fiir Volkswirtschaft, Sozinlpolitik und Vcrwnltung

(Vienna).

Parts 2 and 8, 1913. Theorie dev PrciaverHchiebung. 0. Spann.
Aufgahen and MiiieJ dcr sfaaiUchcn Verwaltung der direkten
Bteuern in Osicrreicli. P. Grunwald. Coiuiluded in the next
nimiber. Die ungarische Industrie politih. J. SzTERf^iNYi.
Uher Bulgariens volhHwirtschafiJirhe EntieicJdung. W. K.
Weiss-Bartenstetn. Die HtaatHivirtscdiuftlicke EntwicMung
. Bulgarie ns . V. K. v. Pozzi.

Parts 4 and* 5, 1913. A reply from Schumpeter and a further
rejoinder by Bohm-Bawerk relating to a discussion initiated
by the latter in Part I. for 1913 on Fine “ dynamische ** Theorie
lies J\ apiialzin^vs ,

GeseUsehajt Osterieichischer Volimvirtc (Vienna).

Jahrp.uch, 1913. A valuable series of articles including: — Die
dhonomischen Wirkungen des Balkanliriegs imf Herhien und
Bulgarien, Otto Neuuath. Die drtlichen Produktionsheding-
angen der Industrie in Osterreich. F. Hertz. Zinafuss und
No. 91. — VOL. xxjii.

K K

474

THE ECONOMIC JOURNAL

[sept.

Geldverfassung. Josef Bchumpeter. Die Entwicklung dcr
osterreicJiischcn StaatHSchulden seit Bcstand der Verfassung.
J. PuREGGER. Die finanzielle und wirtschaftliche Eniwicklung
Russlands. A. v. Markow. Die Brusseler Zuckerkonvention,
H. Friess. Vher die ProduktivUdt der Berufsstdnde, insbeson-
dere der Beamten. 0. Spann. Das franzdsische Bankwesen.
Eugen Kaufmann.

W eltmrtschajiliches Archiv,

July, 1913. Die Stand ortsprohlcme in der Volks- und Weltwirt-
schaftslehre, V. Furlan. A mathematical and diagrammatic
treatment of some problems of international trade. Tendenzen
des italienischen Handels im dsflichen Mittelmeer. 11. Michels.
Die interna fionalcn Vcr fie chi ungen des Versicherungswesens,
Alfred Manes. Die intern at ionale Organisation dcr Petroleum
gcwinnung und des Pctroleinn hand els. J. Mendel. Der
Tabalnnarl'd in Holland. W. Dohle.

De Economist (The Hague).

March, 1913. Nederlandsche bcvolkingsstatisiiek. I. H. W.
Metiiorst. Continued in April and June.

'April, 1913. Nederland cn Engeland op Koloniaal muntgebied.
N. P. van den Berg. A comparison between the currency
systems of Iiulia and the Dutch Colonies.

May, 1918. De Curagaosche bank, I. G. J. Fabius. De etablisse-
nienien van Tjundboiue. J.^C. Kfelstr^. Historical.

July August, 1913. Een idealc waarde-standaard ? G. M.
]h)issEVAiN. Ecnige opmerkhigen onilrent giroverkcer. W. M. J.
van Lutterveld. De (^tragaoschc bank, II. • Het gronderediet .
G. J. FaLius.

Oiornale degli Plconomisti (Ivonie).

May, 1913. Considcrardoni in difesa del giuoco d'azzardo legal-
mente disciplinaio. T. Martf:llo. A paradoxical p<Jernic.
against e-xistijig legal restrictions upon gambling. II prodotto
dei irasporti di Mercc sulle linee ferroviarie Italiape. G.
Mortar a.

June. IJno Htato nello Stato. L. Amoroso. The Italian railways
threatcm to be a dangerous “State within the State . La
C()Umi;j;:a;:ione della Siberia. Jenny G. Kretschmann. An
historical ski^tch.

July. II conflitio Nippo-Americano. Ugo de J-Jenedetti. On
the straiiual relatiniis between Japan and the United States.
Ntnneri indici dello Siaio e del progrcsso econoniico delle regioni
Italiaue. G. Moutara. An index numbt^r construct 3 d from
the changers in ten (or twelve) indications of economic progress
(e>g., the amount of power (unplo^^ed in industry, the value of
successions) shows an advance of 53 per cent, in the decade 1911
for the whole of Italy, and ptTcentjTges ranging from 32 to 81
for different provinces. The data are also employed statically
to show the e(*,onomic relation of the provinces to the kingdom
at one and the same period. Conslderazioni in difesa del
giuoco. T. Martello. Continued from June, and concluded.

1013]

RECENT PEUIODICATiS AND NEW BOOKS

475

La Riforma K:^*ociale (Turin).

June-JulV, 1013. II problcma della popolaz'one in Italia. Achille
Necco. The causes of the particularly rapid decline of natality
in Piemont and Tdguria are investigated ; nnd it is found that
different explanations — decline in the number of marriages or
in the proportion of women of marriageable age, the later age of
marriage, increased diffusion of prof)erty, See . — apply witli
different force in different localities. A furtJier issue of the
Rifonna consists of I/Ifalia Econoniica neJ 1912, an annual
record of the commercial, industrial, and financial condition of
Italy.

NKW BOOKS

RRtf/Us/i .

Baukeh (D. a.). TIk* Th('or\ of Aioney. Cambridge: Univer-
sity Press. 1013. Pp. vil-i 141. Is. net.

fA l^rtber volume in the sorioK of CwtnbriiJgc Mamiah, in noTjtinuation of Cash
and by the same author. Mr. Barker has “atteinptctl iu this book to set

forth the more important results of recent ^merioan work, without omittinf< those
divisions of tlie subject which are better known to English students." A eJeu,r,
elementary text-hook, of not very penetrating quality, by.a close disciple of Professoiw
Fislnjr M,nd Kcmmerer. Perliaps the hook has been too easily compiled the reader
nia> feel that not very much turmoil of spirit has gone to the making ol it. |

CiTATTEUToN (Alfrmj)). Statistical Information regarding tlm
Bxternal Trade of th(^ Myson* Stati* during tin* dt'ctumiiil jicriod,
1901-11. ]3angaIort‘ : A^okkaligara Sangha Jh'css. 1913. P]). 30.

fA valuable siunraary of tlic material condition of lUysoro, prepared for the
Mysore Economic Conference.]

Cotto-Ti Orowiiig in Rgypl and tb(‘. Auglo-Egyptian Sudan.
Alanclioster. 1913. Pj*. 317.

[Official Report of the visit of the delegation of the, International Eedt'ratioii nl
Master Cotton Spinners’ and Manufacturers' Associatiou.s to Eg>pt (Oet.- Nov. 1912)
and a report by the Secretary, Mr. Arno Schmidt, on a visit to the Sudan. Sir
Hegiuald Wingate contributes tlie preface |

k)EiiN (]», Al. Ji.) Th(' Gorman Uotton Imlustry. Alan’cho.sti r :
Uuivcrsit\ Pni^H. 1913. P]). 109. 2s. net.

[A report by the Oartside Scholar iu the University of Mancliestcr, publisb(;d as
No. xiv in the University’s Economic Series. To bo reviewed. |

Dunlop (O. JocElyn). Tin* Farm Labourin': tin* History of a
ATodom Proiilem. London: b’isber Uuwin. 1913. Cp* 7is, Cd.

net. ,

[To be review'od ]

Fay (C. H k Co-]iarf nership in Induslrv. (’umbridgi^ : f^niver-
sity Press. 1913. Pp. 144. Is. net.

[In the Cambridge MaiiuuL Series. To be review ( d.J

K K 2

476

THE ECONOMIC JOURNAL

[sept.

TosTEtt (William). The En<;;lish FactoricB in India, 1642-1645.
Uxiord ; Clarendon Press. 1913. Pp. xxxvii + 339. 128.| 6d. net.

[A. calendar o! documciitri in the India Office. The seventh volume of this series.
Reviewed above.]

Gaskkll (Thomas Penn). Protection paves the path of
Prosperily. TiOiidon : P. S. Kin^. 1913. Pp. xii4-147. 3s. 6d.
net.

[‘*A few facts and arguments showing the absurdities of the Free Food cry, and
tfie misleading and inaccurate assertions made in support of that cry.” To be
reviewed.]

OiKES (Mrs. Philip), edited by. First Notions of Social Service.
London : S. King. 1913. Pp. 80. 6d. net.

[Catholic Studies in Social Reform, F.]

GiLC'iiifisT (IL N.). Snrv(‘y of a Calcutta District. Calcutta:
Edinburgh Press. 1013. Pp. 18.

[An interesting paper, read before the Social Study Society of Calcutta, on the
Housing and Social Conditions of a district of the City, briefly opening up what is,
so far as printed authorities go, almost entirely new ground.]

* Green (E. E.). Tfio Tyranny of the Countryside. London*

Fisluu* Unwin. 1913 Pp. 2(»1. 5s. net.

[To be reviewed.]

Hirst (F. W.). The Six Panics and other Essays. London*
Methuen. 1913. Pp. vi [• 271. '’3s. Gd. net.

[The “other essays” deal witli very various topics. To be reviewed.]

Indian CTnriuiey and Finance. Bombay: The Times i^ress

1913. P[). 24'i.

[“A series ot articles dealing witli various phases of Indian Currency and
Financial questions published in The Ttines ot lud’M between March, 1910, and
April, 1913.”]

Tnstititt Solvav. The Policy of Social Reform in England.
Brussels: Miscli Thron. 1913. Pp. xiii + 103.

[Lectures delivered at the Institute by members of the Eighty Club : Mr. Philip
Morrell on T?ie Rural Problem, Mr. A. G. Gardiner on Social Policy, Sir John
Brunner on Industrial Politics, and Mr. Charles Mallet on Fiscal Policy. 1

Irish Taxpayer. The Finance of the Home Rub^ Bill. Dublin:
Sealy, Bryers, and Walker. 1913. Pp. 18.

(Suggestions for the amendment of the financial clauses of the Home Rule Bill.]

Keynes (John Mwnard). Indian Currency a?id Finance.
London; Macmillan. 1913. Pp. viin-2G3. Gs. net.

[To be reviewed.]

Kolthammer (F\ W.). Some Notes on the Incidence of Taxation
on the Working-class F\amily. London : liatan Tata Foundation.
1913. Pp. IG.

[The first of a series of Memoranda mi Problems of Poverty to be published by the
Ratan Tata Foundation, which is connected with the London School of Economics.
The author brs attempted to estimate the burden of food taxation on familiet of
different incomes and in various localities. J

1913]

RECENT PERIODICALS AND NEW BOOKS

477

JiETHBRiDGE (SiR Roper). The Indian Offer of Imperial Pro-
fertiHce. London: P. S. King. 1913. Pp. xii + 171. 28. 6d. not.

[With an*introduction by Mr. Austen Chamberlain. To bo reviewed.]

Levy (Hermann). Economic l^ibcralism. London : Macmillan.
1913. Pp. ix + 124. 4s. 6d. net.

[Translated from the German edition the title of which, “ Die Grundlagon der
okonomischen Liberalismus in der Gesohiohtedcr englischen Volkswirtschaft,’’ better
describes the scope of this brief historical study. The German edition is reviewed
above. J ♦

Morse (H. B.). The Trade and Administration of China. Revised
edition. London: Longmans. 1913. Pp. xiii 4 466. lOs. Od. net.

[This standard work, which was first published in 1908 and reviewed in the
Economic Journal, vol. xviii, p. 29r), m)w appears in a second edition, revised but
not apparently much changed. Mr. Morse’s account of this C liuiese Currency, in
particular, has taken the position of the jiriricipal autliorifcy on this subjf'ct.j

Oakenfull (J. C.). Brazil in 1912. London: Robert Atkinson.
1913. Pp. 498.

[A description ot commercial products, cte., prepared for free distribution.]

•

Parkinson fMou. FTenri). A Primer of Social Science. Ixindon .
P. S. King. 1913. Pp. xii + 27G. 2s. not.

[An elementary manual jiropared for the Catholic Social Guild by the Rector of
Oscott College Bi^’mingham.]

Pataud (Emile) and Pouget (Emile). Syndicalism and the
Co-operative Comnionwt'alth (11 ow we, shall l>nng about the Revolu-
tion). Oxford: The Kevv International Publishing (Jomjiany. 1913.
Pp. xvi + 237. 2s. 6d, net.

[A Syndicalist Manifesto. Translated from the French by (^./ud F. Charles ;
Foreword by Tom Mann ; preface by Peter Kropotkin ; drawings by Will Dyson.
Reviewed above.]

Petavel (J. W.). The Other Great Illusion, l.ondon : George
Allen. 1913. Pp. 69. 6d. net.

[Based on a series of articles in the Westminster Gazelle. “ Tlie ()l)joot of this
hook is primarily to draw more attention to the facts of modern social economics
which show that present day conditions demand an essentially consti active
programme of social reform and that therefore the modern social question need not
set class against class.”]

Reinheimer (Hermann). Evolution by Co-opcratioii : A Study in
Bio-Economics. London: Kegan Paul. 1913. Pp. xiii-f-200.
3s. 6d. net.

[Mftre biological than economic, and not concerned, as the title might suggesl,
with the Co-oporativc Movement.]

Robinson (M. Eothehgill). The Spirit of Association. London :
John Murray. 1913.^ Pp. x f 403. 6s. net.

[An historical “ account of the Gilds, Friendly Societies, Co-operative Movement,
and Trade Unions of Great Britain, • Reviewed above.]

Rowntrre (B. Seebohm) and Kendall (May). How the labourer
lives: A Study of •the Rural Labour Problem. London: Nelson.
1913. Pp. 34’J. 2.S. net.

[To be reviewed, j

478

THE ECONOMIC JOURNAL

[SFPT.

' St. LKwiNSKi (Jan). The Origin of Property and the Formation
of thfci Village Community. London : Constable. 1913. Pp. xi-fVl.
3s. 6d. net. i

[Lectures delivered at the London School of Economics. Based on the study
' of a very rich Russian literature dealing with primitive forms of property.” To be
reviewed.]

Smirke (K. S.). Heports on Birmingham Trades, prepared for
use in eonneeiion with the Juvenile Employment Exchange. 4 vols.
^London: II. IM. Stationery Othce. 1913. Pj). 8 -b 164 7 + 12.

[These Jiandbooks, which deal respectively with Sporting Guns and Rifles,
Elrctro-PJato Trade, Printing and Allied Trades, and Jewellery, a)*c the first of a
Boric.s under official auspices “which it is proposed to issue on the principle trades
and occupatifms in P>irmingham.'’]

SoMiiAHT (Werner). The Jews and Modern Capitalism. Trans-
lated by, M. Tlpstein. Loudon: Fisher Unwin. 1913. 15s. net.

[The Gorman edition was reviewed in the Economic Journal, vol. xxii, p. 294.]

Unwin {]\Irs. Curden). Tlie Land Hunger — IJfe under Monopoly.
London: Fisher Unwin. 1913. Pp. 234. 2s. not.

[“ TE'seriptive letters and other testimonies from those who have suffered,” with
an introduction by Mrs. Cobden Unwin aud an essay by Brougham Villiors. To be
reviewed.]

Weru (Clarencu.: ,4.). X'aluation of l?,eal Property. Third
edition, revised and enlarged by Ailhur liuiinings. London: Crosby
Lockwood. 1013. Pp. xii 4 340. 7s. 6d.net.

1“ A Guide to the Principles of Valuation of Land and Buildings, etc., for various
purposes, including the taxation of land values.” TJiis work, the first edition of
which was jiuiilishod in 1909, and reviewed in the Economic Jouknaj., Vol. XI
p. 679, is now brought up to date, and a chapter on Tithe Rent-charge added,
it is of a very 1 -hiiical character but scorns well adapted for purposts of re.feience
by non-exports.]

Wright (ILA'. Thomas), (‘dited by. Sweated Jiubour and the
Trade Boards Act. Second (‘dition: tliorouglily n^visi'd and brought
up to date. London: Jb S. King. 1913. Pji. 78. 6d. net.

[Catholic Studies in Social Hi form. //.]

Americfin.

Barson (HiO(;eh W.) and ]\Iav (Kaltti). Commercial Paper: A
Text Book tor Mcrclianls, J^>ank(‘rs, and Investors. Wellesley Hills,
Moss. : BabsoTrs Statistical Organisation. JjOIuJoii : Eliingham
Wilson. 1913. Pp. 246. 8s. 6d.\ict.

[“Tlio book is primarily written for the officers of our nation’s twenty thousand
banks, to aid them in selcctiug the best of such paper.” To be reviewed.]

Beard (Charles A.). An Economic Interpretation of the Con-
stitution of the United Stales. New York : Macmillan Company.
1913. Pp. vi 4 3.SrL 10s.net.

[The author, who is an Associate Professor of Politic^ in Columbia University,
msintains the thesis that economic factors played an important part in determining
the nature of the Amei ican Constitution. Reviewed above.]

1913] RECENT PERIODICALS ANT) NEW BOOKS 479

Brisco (Norris A.). Economics of Business. New York:
Macmillan Company. 1913. Pp. xiv-f-390. Os. 6d. net.

[To be rfeviowod.]

Glocker (Theodore W.). The Government of American Tnxde
Unions. Baltimore: Johns Hopkins Press. 1913. Pj). 242. $1.

[Johns Hopkms University Studies in Historical and Political Science XXX 1.
2. To be reviewed.]

Innes (A. Mitchell). What is Money? New York: Bankinj^
Law Journnl. 1013. Pp. 32. 25 cents. '

[Reprinted from the Banking Law Journal, JMay, 1913. Some interesting
theories on the history of Currency practice. To be reviewed. |

Kleec^.k (Mary Van). Artificial Flower Makers. New York:
Survey Associates. 1913. P]). xix -1-261. $1.50.

[“ This book describes tlio results of an investigation iniu.j by Iho C 9 mmittee on
Women’s Work of the Russell Sage Fimudatiou^ and is the sf'cund in a series of
studies of the condition of women’s work in important trades in New York City.”]

San Francisco Belief Survey: The Organisation and ulethods of
Belief used after tlu^ Earthquakes and Fire of April 18, 1906. New*
York: Survey* Associates. 1913. Pp. xxv -f 183.* $3.50.

[Compiled by Russell Sago Foundation from studios by six ditlorent authors
With numerous illustrations. To bo reviowod.]

French.

Andreades (A.), lios ldc^( s financieres do FAhbe d( Saint-Pierre.
Baris; Giard & Briere. 1912. Pp. 48.

[Reprinted from the Revue de Science et de L<^gislation financit^rrs.]

Andreades (A.). Ali Pacha de Tebelin : Economistc et Financier.
Paris : Leroux. 1912. Pp. 34.

[Tloprinted from the RoAmc des Etudes grecques. An historical study on a phase
of Turkish rulo in Greece.]

Buelens (J.). Les Employes eii Allemague : leiir situation
social(‘ et leur CJontrat d’Emj>loi : Legislation et Bevendications.
Anvers: Cli. &, TT. Courtin. 1913. Bp. xv 1-327. Fr. 6.

[A publication of tlio Itcole des Sciences Poliiiqucs et Sociales tic Louvain. To be
reviewed.]

Dufottrmantelle (Maurk’e)- Les Brels sur BHonrumr (Assistanee
eJ Credit populaire). Baris : Giard (Si'. Briere. 1913, Bp. 300. Fr. 4.

[duvrage recorripeyisl^ par V Acadl^inie des Sciences Morales ct Poliiiqucs. A study
of aemi-philanthropic institutions for making loans on personal credit to mombera of
the working class who are in temporary difficulties.]

Expert-Bezan^'on (JACtjiUEs). Les organisations de defense
'"‘patronale. Baris : iienry Baulin.

I An account of Employers’ Asscciation.

Guyot (Yves). L’ABC du libre Echange. Baris: Alcan. 1913.
Pp. vu + 212. Fr. 2.

[A manual on a very small scale published by ihoLigue du Libre- j^change. M,
Guyot makes a good deal of the failure of the Tariff Reformers in England].

480

THE ECONOMIC JOURNAL

[sept.

Halbwacus (Mattrice). La classe ouvriere et los niveaux de
v’ 3 : liecherchos sur la hierarchic des bcsoins dans les Sooi^tea indua-
trielles contomporames. Paris; Alcan. 1913. Pp. fxvii + 491.
Fr. 7.60.

[The object of this book is to define the limits of the working dais, to explain its
unity, and in particular to investigate what facts are known in regard to its
consumption. To be reviewed.]

Huart (Albin). L ’Organisation du Credit en Franco. Paris:
Giard & Briore. 191B. Pp. 351. Fr. 7.

(To be reviewed.]

Labordere (Marcel). Mouvernents de I'Or aux Etats-Unis.
Paris : Coiilomrniers. 1913. Pp. 50.

[Ropriiited with additions from the Revue de Paris^ March, 1913. M. Labordere
traces with acute analysis the relation between the tendency of the United States in
various years to import or export gold and the periodic crises and inflations in that
country. In an appendix ho brings up to date for 1911 his very valuable Tableau
des Mouvernents de Vor dans le monde, in which the not import or export of gold in
every country of the world is recorded as accurately as the available data permit.]

Lenoir (Marcel). Etudes sur la formation I'.t le mouvement
des prix. Paris: Giard & Briere. 1913. Pp. viii -1^201.

[A rnathomatical and statistical work. To be reviewed.]

Key (Helmkr). La Vic Ecx)noniique do la Suede. Paris: Plou-
Noiirrit. 1913. Pp. 106.

[To bo reviewed.]

Leener (G. be). lia Politique des Transports cn Belgique.
Brussels: Misch k Tliron. 1913. Pp. ix + 320.

[A publication of the Solvay Institute. The author is opposed to a policy of
extending the waterways in Belgium. To be reviewed.)

German.

Arnold (Ernst Gunther). Untcrsuchungen ijhcr die Dis-
kontierung von Buclilorderungeii und ihre volkwirtschaftliche
J^edeutung in Deutschland. Munich: Duncker & lluniblot. 1913.
Pp. xiii + 80. M. 2.50.

[By an officer of tVio Berlin Disconto-GcsollscViaft. ]

Dedheux (Rudolf). Der Suezkanal irn intomationalcn Rechte
unter Benudvsichtigung seiner Vorgeschichte. Tiibiiigen : J. C. B.
Mohr. 1913. Pp. xiv fM5. M. 5.

\Abhandl'imgen aus dem Stoats-, Venoaltungs- und Vblkerrecht, XIII. i.]

Haase (Du. Augustin). Dh'. uiodernen LOsch- und Ijadceinricht'
ungen und ihre Be.d(‘utung fiir die Seiscliiffahrtsbetrjt.be. Jena:
G. Fisher. 1913. Pp. 112. M. 3.

[Ahliajidlungcn des staatswissenschaftlicJien Semmars zu Jena, vol. xii, part 2
Reviewed above. ]

Kaufmann (A.). Theorie und Methoden der Statistik : Ein.Lehr-
iind Lesehuch fiir Studierende und Praktike. Tiibingon : J. C. B.
Mohr. 1913. Pp. xii + 540. M. 16.

[A substantial treatise by a Professor of Statistics at St. Petersburg. To be
reviewed.]

1913]

BECENT PERIODICALS AND NEW BOOKS

481

Kries (Wilhelm von). Beezollverwaltmig und Handelsstatistik
in China. Jena: Fischer. 1913. Pp. x-flll. M. 3.50.

[In Dr. Harms' Series Probleim der Weltwirtschajt. By an ofl&cer of the Chinese
Customs.]

Liefmann (Robert). Beteiligungs- und Finanzierungsgcscll-
schaften : Eine Studio ubor den modenien Kapitalisinus und das
EtTcktenwcsen in Bcutschland, den Vercinigton Staaten, der
Schweiz, England, Frankreich und Belgicn. Jena: G. Fischer.
Pp. xiv-f626. M. 16.

[A second and enlarged edition of Professor Liefmann’s oncyclopspdic work ofi
Investment Trusts, Holding Companies, Issuing Institutions, Development and
Investment Companies, and the like. In the iSrst 112 pages the types of Company
under discussion are classified ; in the 500 which follow companies of these typos,
past and present, in various countries of the world, are catalogued. In the case of
England, the information is limited for the most part to what can with diligence he
extracted from the Stock Exchange Official Intelligence and similar works of
reference. Interpretation or comment based on direct knowledge 15 markedly
absent. ] '

Maieii fC Das Geld uiid soin Gohniuch. Ijcipzig: Toubnor.
1913. Pp. 126. M. 1.50.

[A manual in the Aus Noiiif und Oeisteswclt Scries.]

•

Plenok (JfiiiANN). \vn der Diskontpolitik zur llerrscbiifti libor •
den Geldinarkl. I lerlin : Springer. 1913. Pp. xxvi + J31. ]\I. 12.

I A full discussion of the present position of the lleichsbank and a criticism of it.
To be reviewed.]

RicCi (Umberto). Das statistische Bureau des Iniernationalen
LandwirischaftliclKUi Institutes. • Briinn : F. Irrgang. 1912.
Pp. 34.

[An account of the activities of the International Institute of Agriculture at
Rome, reprinted from the Statiatische Monatschrift.]

SiGEUUS (A.). Plandolsbotriebsstatistik : rnit betSondere Bernek-
si(ditigung dor Warenbandelsbetricbe. Leipzig: Te.ubuer. 1913.
Pp. iv + 82. M. 3,60.

[A publication of the Deutsches Statistisches ZcntralblaU.]

SiLBEKGLP’JT (11.). Ergebiiisso der fiisherigt'ji Versiicdie koin-
niuTialcr Fleisehversorgung in deii grossercai deutschen Btadton.
Berlin: Puttkammer k Muhlbre.cht. 1913. Pp. 43.

[Mitteilu7igen des Siatistischen Amts der Stadt Berhn. III. To be reviewed.]

Stp:inbeiig (M. W,). Das obligatorische Schiedsgorichtsweseii
in Meiiseeland. Berlin : Gustav Seliade. 1913. Pp. 100.

(An Inaugural -Dissertation. To bo reviewed.]

Tugan~Bar/iXowsky (Michael). Sozialc- Phooric^- der Verteilung.
Berlin: Springer. 1913. Pp. H2. M. 2.80.

[In his theory of Distribution Professor Tugan-Baranowsky subscribea neither to
the “ marginal " nor to the Marxian school, but clainiB to have something in common
with each.] 4*

WicKSELL (Knut). VoHesungen fiber Nationalokonomie aul
Grundlage des Mar'ginalprinziiies : Thooretischer Teil. Vol. I.
dena: Fischer. 1913. Pp. xi + 290. M. 6.

[Translated from th^i Swedish. This first volume covers more or less the same
ground as Prof. Wicksell'a former book Ueber Wert, Kapital und Rente. To be
reviewed.]

482

THE ECONOMIC JOURNAL

[sept, 1913.

Italian,

Gini (Corrado). Tj'(‘fjnazionc‘ dello s(*.rtmbiG c il #poterc di
acqnisto (Iclla ruonota. liornc*. 1913. Pp. 16.

f A review of the recent work of Professors Fisher and Benini, reprinted from the
Hivista Italiana di Sociologia,^

SupjNo (Camillo). Iai Navigazionc dal piinto di vista oconomico.
Milan: U. IToopli. 1913. Pp. xi+450. L. 7.50.

[Third edition, revised and enlarged. To be reviewed.]

Tr.RONi (Gostantino Duhsciani). Im ilioc-hezza delle Citta.
Pnlrnno: Lni^i (jai[)M. 1912. Pp. 100.

[h^iXtracted from Vol. II of the Annali del Seminario Qiuridico of the University
of Palermo.]

Turon] (Gostan'iino Bresciani). Be. Vnriazioiii “cicJichoG* dei
Pr(*zzi. Palernio; Luigi Gaipa. 1913. Pf). 58.

[Extracted from Vul, II of the Ammli del Seminario Qiuridico of the University
of Palermo ]

THE ECONOMIC JOURNAL

DECEMBER, 1913

THE PURE THEORY OP UTILITY CURVES.
Ikiroduction.

The object of the following investigations is to clear up certain
theoretical points which cannot be dealt with precisely by the
ordinary diagi-ams. Part I. deals with tlie apparatus to be
employed. In ihe demand curves, used in discussing the exchange
of aggregate quantities of goods agajnst utility or money or other
goods, the ordinate represents the aggregate sacrificed and the
abscissa the aggregate acquired. These curves may also bo re-
garded as the locus of points where the straight linos from the
origin, representing the various possible ratios of exchange, toucdi
constant utility carves — a constant utility curve being such that
all the bargains represented by points on it would yield the same
net utility. Hence we can sometimes get a more precise knowledge
of what is involved in drawing a demand curve in a particular
way by going behind the demand curve, as it were, and consider-
ing its relation to the constant utility curves. The underlying
significance of the apparatus introduced in Part I. depends on a
modification of this idea. Instead of considering the net utility
of an exchange, we consider the resultant utility obtaijied from
the acquisition of two commodities which both contribute to the
utility positively. This gives rise to tw^o new kinds of demand
curve ; one for the case in which the total expenditure on the two
•^nmodities varies their prices remain constant, the other

for the case in which the total expenditure is fixed while the price
of one pf the commodities varies. The first of these new demand
curves enables problems to be attacked diagrammatical ly, in
which the marginal utility of money need not be assurned con-
stant. In order to interpret the meaning of the various shapes
No. 92. — VOL. xxiu. L li

484 THE ECONOMIC JOUBNAL [OBC.

which these curves can assume, we investigate their relation to
the constant utility curves, upon which, as in the former case,
they ultimately depend.

In Part II. the analytical conditions which govern the shape
of the constant utility curves are elucidated. Criteria are given
for distinguishing between three types of the resulting demand
curves, and precise definitions are introduced for the terms
“complementary’* and “competitive” as applied to commodities.

In Part III. the two kinds of demand curve defined above are
further discussed, particularly the case where the prices of the
commodities are constant and the total expenditure on them
varies. It is found possible to analyse the case in which increased
total expenditure diminishes the amount bought of one of the
commodities, as well as the standard case in which more of both
commodities is bought when there is more to spend. Similarly,
when the demand curve is reached, for which one of the com-
modities varies in price while the total expenditure is fixed, we
can analyse the case in which an increased price leads to an
increase of the amount of the commodity bought (i.c., Giffen’s
paradox relating to the expenditure of certain classes on wheat).
Incidentally, it is found possible to give a more precise definition
of the marginal utility of money than that commonly employed.

In Part IV. the problem of more than two variables is
attacked ; and the question of the maximum pr")duct (or uiility)
derivable fVom the expenditure of a give)) sum on n factors (or
commodities) is disc^ussed. The general conditions for a true
maximum are then investigated. This is, perhaps, rather of
mathematical than of strictly economic interest ; but it serves to
round oil what would otherwise be incomplete.

Part I.

§ 1. For the purpose of raising certain economic problems, a
modification of Professor Edgeworth’s “indifference curves” is
here employed.

In Edgeworth’s curves the co-ordinates of any point represent
two variable quantities, one of which is acquired and the other
is sacrificed in return for the former. 7die acquisition yield^:
utility, the sacrifice disutility. The net utility thus increases
with increase of acquisition or with decrease of sacrifice^. The
properties of Edgeworth’s curves are summarised in § 2.

' § 2. As the diagrams have to be limited to two dimensions, w^e

cannot represent by any third co-ordinate the variation in the

1918]

THK PUBB THEOBT OF UTILITY CUBVBS

485

measure of the net utility, arising out of the acquisition and
sacrifice taken together. This difficulty is mat by constructing
curves of cohstant utility. These are such that the net utility for
bargains represented by all the different points or* any one curve
is the same.

Thus if X measures the amount acquired and z the amount
sacrificed, the net utility for the point P, whose co-ordinates are
Xy z, has a value depending on the amounts represented by these
co-ordinates. And the locus of all points, yielding the same net
utility as P, forms the constant utility curve through P.

The constant utility curve l/o which passes through the origin
P is that of zero-utility — i.c., for all points along this curve the
sacrifice of z balances the acquisition of x, so as to yield ;>ieither

more nor less net utility than if no sacrifice and no acquisition had
been incurred. For all points along the curve l/i, which passes
through the point 1 (on x), the net utility is such as would be
yielded by an acquisition, x = 0i, if no sacrifice were incurred.
Along 1 / 2 , which* passes through the point 2, the net utility is
equal to that yielded by x==012, if no sacrifice were incurred;
and so on. (See Fig. 1.)

Tn the standard casa : —

(a) In order to obtain equal additional increments of net utility
we require continually increasing increments of acquisition or
continually decreasing increments of sacrifice.

Thus the lengths Po Pi, Pi F 2 , P 2 Pb, &c., increase ; also the
lengths Qo Qu Qi $ 2 , Q 2 Qb, &c., increase.

T. T. 9 .

‘486

THE ECONOMIC JOUENAL

[DEO.

(5) Between any two utility curves the x distances increase as
we move upwards, while the z distances decrease as we move right*
wards.

id) The curves become flatter as we move rightwards along any
horizontal line or upwards along any vertical line.

Suppose, now, that x is offered us in return for z ; and that
we can acquire x by sacrificing z on certain given terms ; that is,
by giving z for cc at a fixed ratio. The locus of points, for which
the ratio oi z to x is constant, is a straight line through the origin.
Any such straight line may, therefore, be called a Price-Line.
When the ratio of exchange is determined for us, we shall obvi-
ously' niaximise our net utility by closing our bargain at the point
where the price-line, representing the ratio of exchange, touches
one of the utility -curves.

If, after we have agreed to acquire x (say) in return for z,
we are offered a further amount on more favourable terms, we
shall again pass to a position where the line representing the new
price, drawn from our former resting-place, touches another
utility-curve.

And so on.

The crooked line OCi (\ C 3 . . . (see Fig. 2) represepts the
course of a price-line involving changes in the terms on which
we can acquire x in return for z.

Now consider the other party to the transaction who sacrifices
X in order to acquire z. The general character of his utility curves
will be the same as that of the first party with x and z inter-
changed. Hence, if the two parties make a succession of con-
tracts with one another on alterable terms, a crooked price-line
will represent their transactions, in which the conclusion of each
contract is represented by the point wdiere the price-line (repre-
senting the terms of the current contract) drawn from the point
representing the conclusion of the previous contract touches a
utility -curve of one of the two parties earlier than one of the other.
Further, as long as the next section lies between the two utility
curves, further excdianges are made, since they add to the utility
of both parties; but, when finally the new section of the price-
line touches both the utility curves simultaneously, exchang^^
ceases. (See Fig. 2.)

The construction of the ordinary supply or demand curves is
based on the assumption that the whole exchange is transacted on
unaltered terms. This is a practically legitimate assumption in
the case of frequently recurrent exchanges ; that is, when there

1913]

THE PUBB THBOBT OP UTILITY CUBVBS

487

is a continual demand and supply for “consumed’* commodities.
These curves may be called “Offer” curves. There are two ways
of constructing such curves, both of which represent precisely
the same facts. The more familiar plan is to make the ordinate y
stand for “Price,” i.c., for the ratio of z to .t, where z and x are
the total quantities exchanged. The less familiar plan (which is
here throughout adopted) is to use as co-ordinates the total quan-
tities z and X themselves. Now, the connection between an
“offer” curve, and the series of constant utility curves (for the
party making the offer) can be explained as follows : The “offer ”
curve is the locus of points where the straight lines from the

origin f representing the various possible ratios of exchange, touch
one of the constant utility curves. Thus, where the demand-
curve cuts the supply-curve, the utility curves of the two parties
have a^common tangent tchich passes through the origin. This
tangent represents an unaltered rate of exchange. In all cases,
transactit-.is cease at a point where the two utility curves touch.
The speciality of the equilibrium, under conditions where the
WiiOle exchange is made on unaltered terms, is that this common
tangent passes straight through the origin. (Bee Fig. 2.)

On ihe other hand, if one party (say, he who is acquiring x by
sacrifice of z) has control over the production, then the terminus
of exchange is the point where the supply-curve (instead of the

488

THE EOONOMIO JOXTENAL

[DEO.

price-line) touches one of his utility curves. This occurs, for
example, when a person supplies his own needs by his own labour.
(See Fig. 3.) .

§ 3. The modification of Edgeworth’s diagrams, which is here
proposed, is in effect equivalent to turning them upside down.
This procedure answers the following purposes : — First, it enables
us to deal naturally with cases in which tw’O quantities contribute
positively — instead of one positively and the other negatively —
to the resultant utility. Secondly, it can be applied by analogy
to the case in which any number of variables contribute to utility
or to production. Thirdly, it is specially available for the case
in which the monetary resources of the consumer have (for the
purposes of the problem in hand) a fixed limit.

Th^ immediate results of this transformation are : —

(1) That the utility curves are convex to both axes, instead of

Fig, 3.

being convex4:to the sacrifice axis and concave to the acquisition
axis.

(2) That the values of the two co-ordinates vary along a utility
curve in opposite senses, instead of in the same sense.

(3) That the price-lines cut the two axes instead of starting
from the origin.

(4) That the price-lines may be made to vary, not only in
direction, but also in their abscissce.

Thus the accompanying diagram shows how three Price-Lines
FiTi, P2T2, P3T3 may touch three utility-curves at the respec-
tive ix)ints Pi, P 2 , Ps. (See Fig. 4.)

Thus let f represent prices of x, z\ and the amount of
money expended on them. Then the price-lines are represented
by the equations

The abscissa OT along Ox — pf^; i.e., the amount of x which

could be bought for money p.

19131

THE PITHB THEORY OP UTILITY CURVES

489

The abscissa Ot along Oz^fxfi; i.e., the amount of z which
could be bought for money /x.

Thus apy point on tPT represents the amounts of x and of z
that might be bought, when the price of t is that of z is S’,
and the amount spent on the two together is p

Provided we assume that the utility curves descend convexly,
it is obvious that the resultant utility is a maximum where this
price-line touches a utility-curve.

Again, where two price-lines, such as PiTj and P2T2, are*
parallel, we represent constant values of ^ and ^ with varying

values of /x : the ratio of variation being given by the ratio of OT2
to OTi.

Where two price-lines, such as P2T2 and P3T3, cut on the axis
of z at the same point f/, we represent constant values of 1 and /x
with varying values of the ratio of variation being given
(inversely) by the ratio of OT3 to 022-

In the figure given, a rise in money expended such as to shift
the point of maximum utility from Pi to P2 loads to an increase
in the purchase both of x and of z ; and a fall in the price of x
such as to cause a shift from P2 to P3 leads to an increase in the
purchase of x and a* decrease in that of z.

In the former case the money expended has increased, without
changes in the prices ; in the latter, the price of x has fallen,
while the price of z and the total expenditure have remained
unaltered.

490 THE BCONOMIC JOTJETSAL [X>E€.

, This illustration shows how we may construct two kinds of
demand-curves : (a) that in which the total money expended varies
while the prices of the commodities are constant, as from Pi to
P2 ; (6) that in which the price of one commodity (say x) varies,
while the total expenditure is constant and the prices of other
commodities are constant.

A curve drawn through Pi and P2, &c., will represent the
former ; a curve drawm through P2 and P3 the latter. The former
%kind of demand-curve may be called a varying expenditure curve ;
the second, a varying price curve. In both cases all other relevant
quantities, potentially variable, are taken as constant.

§ 4. The character of the varying expenditure curve w’ill be
considered at length in Part II. From it the characteristics of the
varying^ price curve can be conveniently deduced.

The principal problems to be considered are : —

(1) What precise conditions are involved by our assumption,
that the utility curves “descend convexly,’’ which is required if
the tangent solufion for the price-line is to yield a true maximum.
[See § 9.]

(2) Upon what special conditions an increase or a decrease in
one or other of the amounts bought depends for changes in the
position of the price-line. [See §§ 15, 16, 19, 20.]

Before passing on to these problems, it is worth while to
^point out that the diagram measures only the quantities x and z.
There are no lines in the figure which measure tlie utility itself.
The several utflity-curves are arranged in a scale of increasing
value as we pass to the right and above ; and thus the “distance “
(measured arbitrarily) from one curve to another “indicates”
(without measuring) the increase in utility. But this impossibility
of measurement does not affect any economic problem. Neither
does economics need to know the marginal (rate of) utility of a
commodity. What is needed is a representation of the ratio of
one marginal xitility to another. In fact, this ratio is precisely
represented by the slope at any point of the utihty-curve.

Thus the sole mathematical datum is summed up in the fact
that the ratio of the marginal utility of x to that o^ z at the ^int
(Xy z) is equal to the ratio of the abscissa on z of the tangent to
the utility-curve through (cr, z) to its abscissa on x.

Moreover, just as we can indicate (without measuring) the^
total utility (say) at P2 by the distance from the origin of the
curve through P2, and thus exhibit the fact that at P2 the utility
is intermediate between that at Pi and that at Ps ; so we can
indicate the different kinds of Surplus Utility. ’A surplus utility,
in general, means the excess of the actual utility over what might

1918]

THE PURE THEORT OF UTILITY CURYES

491

have been obtained if the individual, under the same objective
conditions, had freely chosen to act in some uneconomic way.

What ^it usually means more particularly seems to be as
follows : Having a given amount of money to expend on various
commodities, and the prices of these commodities being such as
they are, the consumer is supposed to maximise his utility by
spending his money on certain quantities of each of these com-
modities. If therefore, at the given prices, he were to spend all
his money on all hut one of those commodities in the most useful
way, he would procure less utility than if he included this one.
The difference of utility, procured by these two courses of conduct
is the (integral) susplus utility actually derived from the com-
modity singled out. The general problem of maximising utility is
applicable just because there is this surplus. ^

In the diagram (see Pig. 4) the surplus utility (say) "it P 2 , due
to the inclusion of x in liis purchases, is indicated by the dis-
tance ** between the utility-curve through Po and the utility-curve
drawn througl? // (where x = o for the same money expenditure).
The convexly descending shape of the utility-curves shows that the
utilii V at is less than that at P 2 . And the degree of this surplus
is indicated by some line drawn from the curve through t' to the
curve through P 2 . To indicate tlys differential utility, it would
be theoretically most convenient to draw (from the origin) a line
through points, on the successive curves, where the tangents ar^
throughout parallel to one another. But the sections — between

any two curves — ot the different lines (corresponding to the
different directions of the (^sterns of parallel tangents) would not
necessarily be proportional to one another.

Before enteriijg upon the analytical discussion of Part II.,
we may examine Figs. 5 and 6, which illustrate the purport of
this section. In these figures, small bits of the successive con-

49S

THE ECONOMIC JOTTBNAL

[DEO.

ptant utility-curves are drawn where they touch the varying
price-lines. In Fig. 5 the demand-curve is exhibited which
depends on varying expenditure, with the prices of a?, and of z
constant. In Fig. 6 the demand-curve is exhibited which depends
on variation in the price of z alone. In both figures the increas-
ing power of purchase (and, hence, the increase of utility) involves

Fio. G.

nt first an increase both of x and of z, and after^cards an increase
of X with a decrease of z. In this way, the solucion of the two
chief problems above mentioned is shown to the eye.

Part II.

In this Part, w^e shall confine ourselves, in order to be able to
use diagrammatic representation, to the cases in which the
consumer’s utility (w) is a function of two quantities only, x and z.

We shall assume two characteristics of this function, and shall
shew in § 9 that, of these two characteristics, the first proves the
curve to be descending to the right, the second proves it to be
convex to the two axes.

§ 5. The first assumption is that any incremef't of x or oi z
increases u,

i.e. ^ and — are both positive (!•) .

Before coming to the second assumption some new symbols
must be introduced. The standard case is that in which an
increase of any factor causes a decrease in its< marginal utility.

are both negative.

493

1913] THE PURE THEORY OP UTILITY CURVES

^ It would, therefore, be convenient to use the following symbols
for measuring the relative changes in ^ or ^ due to changes in

X OTZ : —

. du ^ — dho . /du du\

Change m due to dx =

. d^t - . , _ dhi . /dn du\

Change m^. due to d. = - . -j.

• du •• j. j d^'ic f die du\

Chmg, m due to dx = r„- - ■ ^).

^T_ , du j • , , _ fdu dtt\

Chango m due to * = t„= - -J.

Again, in ihe standard case, a change in the amoiriTt of x would*
produce a greater relative change in the marginal utility of x than
in that of z ; and a change in z would produce a greater relative
change in tli« marginal utility of z than in tlfat of x. That is,
usually ,

^11 > ^12 and ^22 > T21.

However, these standard relations do not hold universally. It
may be that a change in ;3, as well as a change in x, produces a
greater relative change in the marginal utility of x than in that
of z, V

That is, it may be that r2i > 7-22 as well as ^il> ^12-

This leads up to the second postulate, whatever relations
there may be otherwise, we shall lay dowm the following restrictive
assumption : —

Although a change in z as well as a change in x may produce
a greater relative change in the marginal utility of x than in the
marginal utility of z, yet such excess as is due to a change in x
(measured relatively to the marginal utility of x) will invariably
be greater than such excess as is due to a change in z (measured
relatively to the marginal utility of z).

Xhis assumption, expressed analytically, is that

'^11 '^12^ *^21 '’^22

ix. Tij-f T22-“2 ti2 ( 2 )

§ 6 . In dealing Vdth two variables, it is convenient to make the
following substitutions : —

du d^u

dib du

496

THE ECONOMIC JOITBNAL

' Hence, when lies between and V~, we may say

that X and z are competitive. •

But, when is greater than both and then we

may say that x and z are complementary.

dV dW

In the former case, either ^ or is positive, in the latter

* dV ^ dW ,
case ^ and are both negative.

In the former case changes along the Demand Curves involve
an opposite variation in x and z ; in the latter the two increase or
decrease, together.

§ 9. We. may now show how the curves constructed on these
considerations will behave.

In the constant utility curve, u — c, we have

du /dz\ du^^

Thus V measures the inclination to the axis of x of the
tangent to the constant-utility curve at any point.

, Since, in accordance with our first assumption, and are
both positive, ,

* ’ (^) \ i,e.y the curves fall to the right.

Again,

__dV /dz\
\dix^/ n dx \dx/ m

dV^dJ^
dz ^ dx

Since, in accordance with our second assumption, this last
expression is negative,

( dP‘z'\

is positive ; i.e., the curve is throughout convex.

It follows that any straight line (between the axes) can touch
only one utility curve, and only at one point; and that at this
point the utility will be a maximum. [See Figs. 4, 5, 6.] The
results of this section resolve the first problem of § 4.

§ 10. The condition of convexity may be written ; —

_ du

. . . .(3)

dx dx

' ~dz • • *

. du

. . . . (4)

dz ^ dz

dx ' ' ’

1913]

THE PURE THEORY OP UTILITY CURVES

497

dW dV

Id the mediate section, and ^ are both negative, and
dV • dW

thus ^ and are both positive, so that the above relations
are obviously satisfied.

dW / dW\

But in the z-urgent section, ^and are positive, and
dV / dV\

thus ^^and are negative. Hence in this case, from (3),#

\ dz)^dz \ dx^'
du du ^dV dV

also

dx' dz^ dx * dz

( 5 )

i6)

thus

also

du , dxi ^dW ^ dW
dx * dz ^ dx * dz

But in th% x-urgent section, ^ ^and -are positive, and

are negative. Hence, in this case, from (4),

dW\
dx )

. d'u
\d^

■(■

, dW

^du ,

, du

’ dz

. dV

du ,

, du,

‘ dz

^Tx''

'dz

( 7 )

(8)

Thus the relations expressed in (7) and (8) for the x-urgcnt
section are the reverse of those expressed in (o) and (6) for the
z -urgent section.

§ 11. The distinctions between the three sections may usefully
be indicated by constructing adjacent utility-curves. [See
Figs. 8 (a), (b), (c).]

ADJACENT UTILITY CUEVES.

Mediate Section Z""Urgent Section

Fio. 8 (a). Fio. 8 (6).

X-llRCENT Section

Fig. 8 (c).

498

THS BOONOMIO JOUEKAL

[dec.

" Let Q and R be two points on a utility curve ; and P a point
on an adjacent curve of lower utility, where the ordinates at Q
and R meet. •

Draw tangents to the utility curves at P, Q and R, The
slope at P may be related in one of three ways to those at Q
and R.

In the mediate case, the slope at P is intermediate between
those at Q and at JR.

Mediate Case Z— Urgent Case

Fio. 9 (a). Fig. 9 (6).

Fio. 9 (c).

1913]

THE PUBB THEOBT OP UTILITY CUKYBS

499

In the z-urgent case, the slope at P is steeper both than that
at Q and that at R.

i.e.

-^<0 but ^>0.

In the x-urgent case, the slope at P is flatter both than that
at and that at R,

_>0 while ^<0.

Since the slope at Q is always steeper than that at J?, the three
figures represent all possible cases.

§ 12. The shapes of the curves may be still more fully shown
by Figs. 9 a, h, c for any two utility curves not necessarily
adjacent.

We draw ho^'zontal and vertical lines betw^\n any two
curves.

In the mediate case, BQ < AR and RD < CQ,
i.e.,the x-disb^nces decrease as z increases,
and the 2 !-distances decrease as x increases.

In the ; 2 -urgent case, BQ < AR but RD > CQ,
t.e., thr x-d>.t8nce8 again decrease as z increases;
but the ; 2 !-distances increase as x increases.

In the x-urgent case, BQ > /IE* while RD <iCQ,
i.e-jihe x-distanccB here increase as z increases;
while the ;3-distances decrease as x increases.

N.B. — If the ratio of the marginal utility of z to that of x

varied only with variation of x, so that lF = /(x), and = 0;

then, the vertical distances W’ould be constant, or the utility
curves would be parallel at the same value of x. This is the
diagrammatic equivalent of the constancy ascribed to the mar-
ginal utility of money (z standing here for money).

Part III.

Money and Prices.

§ 13. Let fx be the amount of money spent on two factors x
and z, w^hose prices are f and I respectively. Then

i.e. ^+^^=1.

This straight line may be called the Price-Line.

Its intercept on the axis of x is /z/f : its intercept on the axis
No. 92 — VOL. XXIIT. MM

XHE ECONOMIC JOtTBNAIi

500

iDBC.

of z IS fx/^. The former increases as ^ decreases, the latter as ^
decreases — fi being constant.

The maximum utility is where the price-line touches a utility
curve ; the inclination of the tangent at any point of the utility

dt4t du

curve is given by the ratio of to ^ ; and the inclination of

the price-line is given by the ratio of f to

We, therefore, may construct the following three curves of
Demand : —

, . du ^ du du ^ dtt^^

^ ^ dx * dz'^^ dz ‘ dx‘~

du . du^fjil^^z
dx- dz"^ X *

. dxL \ du ^ fi I

dz ' dx z '

The first cur^^e is to be used, when 5 smd ^ are constant, and
ju varies. In this case, the price-lines are a series of parallels
determined by the ratio | to f (see Fig. 5).

The second curve is to be used, when /x and f are constant,
and f varies. In this case, the price-lines are a series of lines
through the fixed point ir = 0, z = jUL/^,

The third curve is to be used, when /x and f are constant ,^nd
' f varies. In this case, the price-lines are a series of lines through
the fixed point z=0,x== jn/ ^ (see Fig. 6).

The curves (.1), (2), (3) may be briefly written in accordance
with our former notation : —

0) or

(2) Vx+z^filC

(3)

We shall begin by considering curve (1), where F(=f/f) is
constant. This discussion is given in §§ 14, 15, 16, 17. After-
wards we shall deduce the characteristics of curves (2) and (3),
and compare the results obtained with those for curve (1),^ This
discussion occupies §§ 18, 19, 20.

§ 14. Whereas in the w-constant curve we have

= F..

we have in the F-constant curve

501

1913] TW& PTJBB TfiEOBY OP UTILITY OtJBVKS

Now, by the condition of convexity,

du dV . du dV
dz * dx ^ dx ' dz*

dV dV

In the mediate case, where ^ is negative and is positive,

we see that is positive; i,e, along the f/?-constant curve,

z and X increase together.

dV dV

In the 5?-urgency case, where and are both negative,

or in the a;-urgency*case, where and are both positive,

is negative , i»€. in both cares, x and z vary o^'pcsitely.

Now, we have previously, shown that, where z is argent,

i.e,, the F-constant curve i^^stee/per than the

tt-constant curve, at any point where z is urgent.

On the ^ther hand, where x is urgent, ;

^ dx dz dx dz

i,c., the F-constant curve is fatter. than the w-constant curve at
any point where x is urgent (see Fig. 5).

§ 15. We will now show how the urgency oi z or of x deter-*
mines the corresponding course of the F-constant curve.

We have

duj^ , duj^ ^ ^

j Bx^—Dz = Du,
dx dz

(M Dx ^du Dz
dx Du^dz Du “

. (a)

Dx X^z

where and are total differential coefficients, derived from

any relation in which x and 2 : are determined as functions of u.
Now, along the F-constant curve, we have

dVr, ^dV^ .

Thus, this curve combined with « ^ f {x, *), determines a: as a
function of u, and a; a function of n, such that

Du^ dz Du,

= 0

Equations (a) and (/8) determine the values of •=- and

03 )

Du “““ Du
mm2

502

thb economic joubhal

(»BC.

Thus

(;

dV du dV\Dx _d,V
'dz~dz‘ dx)Du~ dz

dz ' dx dx ' dz/ JDv, dx
Dx .

(7)

(S)

Here the coefficient of -jy is positive, and that of is negative.

Hence,

and

Dx . , , . . dV

2 ,- has the sign of

Dz , , . , dV

has the sign of — •

Dti

dV dV

Now, in' ihe mediate case, and are both ^positive)

hence, here, both x and z increase "with increase of utility.

* dV dV

In the z-%irgent case, and are both 'tlegative\ hence,
here, x decreases and z increases with increase of utility.

In the x-urgent case, and are both positive ; hence, here,

X increases and z decreases with increase of utility. The results
of this section solve the second of the principal problems (men-
tioned in § 4), for the case in which the changes in the price-line
are due to chang^es in amount of moiip}^ expended.

§ 16. The above results may be shown diagrammatically.

A glance at the curves [see Pigs. 9 (a), (b), (c)] of varying
convexities, corresponding to the three cases — mediate, ^;-urgent,
ir-urgent — will shew the course of the F-constant curve.

In the mediate case, the point in the curve jBAtJD. where the
tangent is parallel to Q will be to the left of C, and the point
where the tangent is parallel to R will be below" A.

Hence, the course of the P-curve from BACD to QR will be
upwards and rightwards : i.c., an increase of utility will involve
an increase both of x and of

In the ; 2 :-urgent case, the jioint in the curve BACD where the
tangent is parallel to Q will be below and to the right of C, and
the point where the tangent is parallel to R will be (far) below A,

Hence, the course of the P-curve Irom^BAGD to QR will be
upwards and leftwards : t.c., an increase of utility will involve
an increase (large) of z and a decrease of x.

In the x-urgent case, the point in the curve BACD where the
tangent is parallel to Q will be (far) to the left of C, and the

1913}

THB PITBB THBOBY OF UTILITY OUBVBS

503

point where the tangent is parallel to R will be above and to the
left of A.

Hence,* the course of the F-curve from BACD to QR will be
downwards and rightwards; «.e., an increase of utility will in-
volve an increase (large) of x and a decrease of z.

It is also useful to note that the F-curve rises more sharply
than the w-curves where they meet, in the 2 ;-urgent case, and less
sharply in the a;-iirgent case. [See § 14. ~\ In other words, whej^
the w-curves cut a F-curve, the F-curve is more nearly parallel to
the axis of Z when z is urgent, and more Jiearly parallel to the
axis of X when x is urgent.

§ 17. We may repeat the explanation that the F-constant
curve is to be regarded as the eur\e of d(unand for x vud z jointly,
when the prices <a x and z are hxed, and the ainaunt of money
expended on x attd z together is allowed to vajy.

The amount of money (p) purchases the utility (u), and thus
we may speak«of ttie price (say n) of a unit of utility. We may,
therefore, write

+ fl^ TTU,

Let us introduce the symbol € as a variable depending on the
nature of the function u~f(Xy y), such that

du . da _
x^'+z j =zeii,
dx dz

Then, (say) along the F-constant curve

dx dz

fl^7rU=^K€U.

Now, along the F-constant curve.

and

dx dz

^Dx + ^Dz = Dfi . ;
Du

~ measures t^ie marginal utility of money.

And

^fji 1 ^fiDu
U K uDp

zdx

[N.B.— -Expressions of -the form are of very frequent

occurrence in the analytical treatment of economics (and other
sciences). Tnis lorm of expression corresponds to the general
notion of elasticity. When x and z are such as to increase or

534

THB BdONOinO JOURNAti

[DBO.

iscts^

decrease together, and are both positive, so that is positive,

the important variation in its value is according as it°is greater,
equal, or less than unity. It can easily be shewn that these three

cases correspond, respectively, to the three cases according as

increases, remains constant, or diminishes when x (or z)
ipcreases.J

Thus, € may be regarded as measuring the elasticity of u in
terms of money; i.e., the rate at which utility increases propor-
tionally to an increase in money.

This rate gives increasing, constant, or * diminishing returns
of utility, for money expended, according as e is greater, equal or
less than unity.

The result can obviously be extended to any number of factors
purchased.

§ 18. The Demand Curve for Variations in Ptice of x.

The equation here is

Fx + 3 = /Ll/f.

where / 4 /f is constant.

This gives

and

dx ”” do' * dz

dF_
dx dz

dV.
+ 1

\dz)^,f~ dz'^\dz}^/ dx

§ 19. We will now show how the urgency of x or of z deter-
mines the course of the /i/i constant curve.

We have

THB PXTBB THEORY OB UTILITY CURVES

505

191§3

■where ^ and ^ have to satisfy the equation

Equations (a) and (/3) determine the values of

Th ^ V\Dx _ d V 1

* i^z dz * dx )l)u> dz x

and

\dz * dx dx* dz /I)u dx
Dx

Dz
Du

. (7)

. (S)
Dz

Here the coefficient of is positive, and that of is
negative.

Thus ^ is positive or ncgati\^o, according as or

and is j>ositive or negative, according aa or

In this way we learn where the curve moves upwards or
downwards, rightwards or leftwards.

It snould be noticed that, by aid of the formulae in § 18, the
relations (y) and (8) may be shorty written

_ du (dV\
”” ^dz * \ dx /

- Du dn /dV\

That

§ 20. We may compare the results of § 19 with those of § 15 ;
and thus discover the relations between the Cv)urse of the /x/^-
constant curve and the f/f-constant curve.

dV ,

In the latter, Dx becomes negative when is negative, but

dV 1

in the former, Dx becomes negative only when < — - .

is, a higher degree of relative urgency of z is required to lead to
a diminution in the amount of x demanded, where merely the
price of x falls, than when merely the joint expenditure on x and

increlases. Thus, when lies between 0 and —l/a;, the

O/Z f(

constant curve is moving leftwards^ but the ya/f-curve still moves
dV 1

rightwards. When < ”“r» curves are moving leftwards,
dV

and when ^ > 0, both cufves are moving rightwards.
az

Again, in the f/f-constant curve, Dz becomes negative only

dV , . . .

when ^ positive, but in the /i^/f-constant curve, Dz is negative

£06

THE ECONOMIC JOURNAL

[dec.

dV V

as soon as ^ > . That is, a lower degree of relative urgency

CltC 00

of 00 is required to lead to a diminution in the amount of z
demanded, when merely the price of oc falls, than when merely

the joint expenditure on x and z increases. Thus, when ^ lies
V

between 0 and , the |^/^*-constant curve is moving upwards,

curve is moving downvnrds. When
curves are moving downwards, and when

but the /i./S'-constant
both

< T’™ curves are moving upwards.

For instance, starting from x = 0, in the curve Vx-\-z = fifi,
we have z — This is obviously an absolute maximum for z,
since V and x are positive. As V diminishes along this curve,
correspondingly to the cheapening of x, the curve becomes finally
asymptotic to the horizontal line z^fx/l. But it must begin by
falling from its initial maximum height z==fx/l. In other words,
when X is very small, and z very large, the demand for x. must be
very urgent relatively to that for z. Hence x begins by increas-
ing at the expense of a rapid lall in z. If, however, the absolute
need for x is soon gratified, and the need for z begins to be -more
'felt, then z may reach its first minimum vaiue whe^i x is still
small, after which x and z will continue to r^se togeiher. When

' dit dtfc

X and z are rising together, and may both be presumed to

be diminishing. But if, owing to a relative superabundance of x,

^ rapidly diminishes while ^"is only slowly diminishing, V

would diminish very rapidly if x continued to increase. A gradual
diminution of V might therefore be effected by decreasing x (and

thus increasing

Part IV.

§ 21. To find the maximum product obtained at a given
expense (/x), when the prices of the factors are given.

Let p = /(a, h, c , . , ) ( 71 -faotors)

where aa + h^+cy+ . . ! .

Dp^Q gives . =0.

j9/x = 0 gives aDa-\-l3Dh'{-yDc-\- .... =0.

THE PTJEB THBOBT OP TTIILITY OOBVBS

507

for arbitrary increments Da, Dh ....

Hence k is determined by the 7i-equations,
a y8 _ _

d/lda~dfl^~ ••••“*•

These 7i-e^ations/together with

aa-i-bjS-h .... =^fit

determine the (n-f-1) quantities k, a, h, c. . . .

§ 22. Let / be such that

da^"db^ dc^ • ■ ■ •

where, in general, e is a variaUle function of a, b, c
may be called the elasticity of production. ,
Then, from above,

fji=^aa + h/3+cy+ .... =eArp

Or, if TT = cost of unit of j?, so that = Tiy, = - •

> <

Thus /c = 7r, according as e=l.

< >

§ 23. Now the price of an agent yaries with his own
“marginal efficiency” combined with his contribution to the
general efficiency. Thus

da da da da

TT . dir , dir

Thus we have two sets of equivalent equations

^ ^ -R

dplcl^~^ d2)ldb^ ' ’ * ‘

^ ^ ^ ^ = t

dirjda dirldh * • * • l — g (X—

§ 24. Eliminating a, b, c . . . . and fc, the above give /x as a

function of p, say p = x(P)-

508

IHB ECOMOUIO JOtTBNAIi

illong this curve

Dfi^aDa+^Dh+f>^Dc . . . .

pDp

Hence 6=1, according as the expense of producing p involves

what may be called increasing, constant, or diminishing efficiency
of money ; or according as

, at the values of a, 6, c .... for which the maximW production
is determined.

§ 25. We must consider the general condition that the values
obtained for a, b, c . . . . will give a true maximum — rather
than a stationary or minimum value — for p. This will depend on
the sign of the second differential of p ; that is, upon

da^ dado

where, since a , DaV/5 . 1)1+ ,

=0,

and a, &c., are proportional to &c.,

we must have accurately not merely to the first approxi-
mation) .... =0.

We make the following abbreviations :

I"-*-

^ T AA- .

da^ ' \da/ dadb ' \^a db)

Then the required condition is that

.... should b® posiiwtf,
where a:^H-.r 2 + .... =0.

Substituting Xi= - (x 2 + Xs+. . . .) in the quadratic, we
obtain the quadratic in X 2 , Xs, &c., of which the typical terms are
»i (•>^11 + Tas - 2 tij) + + t^- - r^).

19li]

THB PURE THEORY OF UTILITY CURVES

606

The disc^minant so obtained can be shown to be that of which
the successive minors are

Oil
— 1 T„ T,,

-1

Ml M2
'1 *^10!

, &c.

M 2 ^22 1

all of which must be positive, [N.B. — The first is identically
positive.] Thus, there are (n-1) conditions of sign, where n
is the number of independent variables.

Thebt3^-<*<m^ions are equivalent to the statement that thft
“ surfaces ’* (a, 6, c . . . .) are in all directions convex to
the co-ordinate axes. But there are several ways of indicating
the economic significtince of the result.

§ 26. We will begin by a consideration of the nature* of the
curve p — wb’ch is analogous to a line of force cutting across
the equipotential surfaces p-rf (a, h, c '

It is instructive to deh-rinine how much each of the factors
c, b, c . . . . increased or decreased when the expenditure p
is increased. That is, we must determine the values of the
Da m
Dp* Dp

We shall replace Da, Db

ffid adopt the same abbreviations, wrhere now we have

thus
and

differentials

&c., when p and therefore p are increased,

. in the above by

= 1 , '

—

a _ _ __ __

dpjda'^ dpjdh ' • • *

Then, taking the total differential of the logarithm of these
equations,* we have

IDk
fc Dp'

1 Dt

log K + log log a, &c.,

]z-. 4.

* da/Dp^\dadh ' da) Dp~^

iDh

Writing ~ system of equations for

and K

become

O+iTj, •

. . =1,

--Z'+‘7^i!Si + Ti^%-2 + Ti3X3+ . .

. . =0,

-- + 7*22^2 *^23^3 d" • •

. . =0,

— iSr + Ti3a\ + T23r^2+T33.T3+ . .

. . =0.

The determinant here is that which has been shown to be
(with its several minors) necessarily positive.

SIO

THE BCONOMIO JOtTBHAL

[flBO.

It may be written | 0123 .... | , correspon^ng to the
unbordered determinant j 123 . . . . | .

Thus K is given by the equation

Kx 1 0123 .... 1 = 1 123 .... I .
or rather, we must indicate the several values of K by Bubscripts
according to the factors that are to vary. Thus

ZiX

^19 X

0 1

-1 Ti:

0 1
— 1 T,.

= T„, le., =

'12

■^12

'’’12

^22

, &C.

The following relations can be proved,

— A'' r=rr 2

-^12 ^123 *^3

1234 '

/}• 2

I 012 I .

1 01 r

•1 0123 I
• 1012 I
[01234 I
I 01231

where Xj, * 3 , . . . . are the values of the last terms in the

several solutions, for 2, 3, 4 . . . . variables.

Thus, it easily follows that the conditions for a true maximum
are equivalent to the series of inequations —

-^128 ^

Now

1 -Dx _ (-i . Itp\

K Dp DfjS- ' DfM.)

Thus K measures the rate at which the inverse of the “mar-
ginal efficiency ” of money changes. K is not necessarily posi-
tive. But the above inequations are equivalent to the economic
statement that “any increase of money tends less and less to
diminish its ‘ marginal efficiency ’ as the variety of factors upon
which it is expended increases.”

§ 27. Another elementary account can be given of the signifi-
cance of the various K values.

Beturning to the second total differential, w.e have the
quadratic expression, where 2 x = 0 ,

Ti,Xi2-i-2TijXia;j-h ....

Let the various values of x be equated to se— f. Then

Tu*1* + 2Ti,X^Xj+ .... =Ti,!ri*-l-2Ti/rj.f2-|- ....

+ '>'nfi^+2'ri,fif2+ ..••

-2?2(’-1‘A + V4+ • • • •)

THE PTJBE THEOEX OE (TTILITT 0CBVES

611

191|]

Here &c., may be chosen arbitrarily, when asi, . . . .
have any given valaes. ^

Let os (;boose them to satisfy the equations

Xi+Zt+ .... =2^

Tiiiri + Tijjrj,4- .... =K.X^,

'>'iir»i+v,+ .... =Z.2f.

Then, since 0=2a!=2ir— 2^, . •. 2ic=2f. Thus K must have
the value K■^^ .... (^tained before). Multiplying successively
by »i, », . . . .-^S-nd adding, we have

■'■nV+2ri2®i«2+ .... =K .l^ — K

Thus

T,ja;j*+2Tija!,!Cij+ . . . . =

....

where f 1 . aril unrestricted. Hence another form of the
condition for a true maximum is that the series of determinants
obtained from |123 . , . by subtracting • • • • from
each c/mstifaent must be positive. [The last of these is
identically zero.]

§ 28. We may give a diagrammatic representation of an
miporiant application of this result.

Let us choose (say) r of the quantities fa, &c., so as to*
satisfy

?1+ • ‘

— iTj . _ .... 4“ Tjrfr = 0 equations,

-i4...r + Ti2l^l+ • . . • +T2rfr = 0j

and let fr+i> &c., = 0.

Then

.... , . . r"“-^12 . . . n»

In the diagram, we represent a tangent “plane” RQ at R to
the production “surface.”

Then, if P represents any previously obtained maximum
position, the movement from P to Q will represent the maximisa-
tion obtained by using an extra increment of money on the factors
corresponding to up to fr ; whereas, the movement from P to
R represents that from using the same amount of money on all
the factors from to •

The convexity of the production “surfaces” shows that the
value for R is greater than that for Q ; and the above equation
shows that the increment of utility along the “tangent” plane,

612

XBB ECOHOUIO ^TOtTBEAIi

^DEO.

(i^hBre 2a; = 0) is measured by the second differential value
TiiXi^^QTiXiX 2 which must, therefore, te positive.

The difference of utility beween that at R and t'hat at Q is
the incrementally measured '' surplus : i.e., the excess value of

expenditure on (fr+i . . . . fn) over that of the same amount
expended on (fi . . . ♦ fr).

On Some Special Forms of the Production Function,

§ 29. Grouped Factors ,-^The factors in production often foil
into separate groups. In this case it is legitimate to maximise
* for one group at a time ; and finally maximise for the whole.
Or, we may have groups of groups which may be similarly
treated.

The grouping of factors, here, means that the product is a
function of functions of separate sets of factors.

The simplest case, for illustration, is that in which ihe pro^
duct is a function of two functions of two factors each.

Thus, let p =/{V^(a, &), x(c, g)},

Then

dp df dyjr
da dyjr da '

dc dx dc *
dp , dp _d^
da ' dh da * dh ^
d^p _ d^/ _ dx_
dadc dadx dc
d^p
dadc

dp dp
da dc

dp _^df ^ dyjr ^
dh db *

dg dx dg '

dc * dg dc * dg*
d^f , dyfr dx,
d^jrdx dA dc *
d^f
dj/dx
^

d^ dx

513

191.p THE PUEB THBOBT OP UTILICT CTXBVE8

ThiB shows that the values of r which belong to factors in
separated groups (such as a and c) are equal to one another, so
that we can write

For

Tac — rfeu — Tfjig —

Thus we may maximise separately for ^ and x*

1 dp 1 dp . 1 dylr 1 dylr

“ ==2> becomes -T-= a -jf,

a da yS db a da^, p do

giving values depending, only on the form of independently of /.

A s;^ecid^; r?ase of the grouping of factors, which je sometimes
assumed, is that in which the function / is a simple summation ;
i.e.,

P = 9-)

In this case we may speak of the separated groups as being
independent of one another. This assumption is often per-
missible when p stands for the utility of consumption. H^re, of
course, the second differentials of p connecting factors in distinct
groups vanish =

In the simple casep e/W^, &), 9)) represent all

the analytical work by diagrams in two dimensions. Thus,
taking a, b as axes, we can maximise for ^ (a, h ) ; and represent
^ by X. Then, taking c, g as axes, we can maximise for x
c-a i represent x finally taking x and z as axes, we can

maximise for f {x, z).

W. E. Johnson

, THE EELATION BETWEEN THE CHANGED IN
WHOLESALE AND KETAIL PEICES UF FOOD.'

While a great deal of attention has been given to the forma-
tion of index-numbers measuring the change of wholesale prices/
and while in more recent times fairly successful attempts have
been made t9 measure the movement of some retail prices, there
have been (so ^ar as I know) no serious practical inquiries or
theoretical investigations as to the nature of the relation between
the two groups. I propose in this article to examine this relation
in the light of available statistics.

The retail price of a commodity is influenced by, and is nearly
the sum of, the wholesale price, the cost of transporting the goods
from the market, warehouse, or ship, merchants’ and brokers’
commissions, manufacturing, more transport commissions, cri^s
and profits of retailing and deliAwy, interest on the capital em-
ployed in carrying the goods from the time of wliolesaie purchase
to the time of payment by the consumer, and (in some cases)
government tax.

In the case of food the only very important manufactures
are the milling of grain and the baking of flour, and the taxes are
small and easily reckoned, so that the principal differences
between wholesale and retail prices are attributable to interest,
merchanting, transport, and retailing. Of these pure interest can
hardly average more than 1 per cent, on the wholesale price for
the bulk of food, which passes rapidly into consumption and for
which cash payment is general. We are then left with the pure
costs of distribution, that is, with transport and dealing, for food
in general, and in addition with milling and baking in the case of
bread, and of duties in the cases of sugar and tea.

Now let us consider tfie effects of a rise and of a fall in whole-
sale prices. We must distinguish fluctuations or short-period
movements in price from long-period and steady movements.
The conscious effort of the retailer is to keep prices unchanged. -

^ Based on a paper read before Section F of the British AH^ktion, 1913.

1913] WHOLESALtt AND BBTAIL PBICBS OP POOD

616

If be can secure a contract from the merchant, short movements
will be entirely borne by the latter or by the brokers, part of
whose economic function is to carry risks. 3iit when the whole-
sale price of flour or sugar or meat rises, the retailer must either
raise his price or substitute an inferior article, or make less or
no profit. Now wholesale prices can move by very small per-
centages (say 1 per cent.), while retail prices move by jumps of
6 to IG per cent. The retailer meets this difficulty by making
less thaii his normal profit when the*rise is less than would justify
his raising his price, say Jd., and then raising it |a. as soon as
the wholesale price goes up fractionally more ; so that one month
with another he makes a regular profit. If, however, the whole-
sale price rose fractionally and there remained, he would lose for
some time and recoup him^-elf. As soon as we take an

average of several months or several towns, the irregularities of
relationship between wholesale and retail prices due to these
differences of unit disappear. Sometimes when a tax is imposed
or raised, or wSen the Press gives prominence to a rise of prices
and the purchasing public is persuaded that a rise is inevitable,
the retailer c Ivances his prices prematurely and makes an extra
profit; but his power to do this is strictly limited, in some cases
by competition, and in all cases he^must consider the elasticity
of demand. Finally, a retailer can often keep his prices steady
by balancing a loss on one commodity by a gain on another. On
the whole, small short-period wholesale movements do not affect
the purchaser at all.

Now let us consider the case of a permanent and considerable
rise in the price of one commodity, while prices in general are
steady. After the brokers, merchants, retailers, and customers
have tried their strength in throwing the burden one on the other,
retail prices settle at a higher level. Suppose that the wholesale
price per 100 lbs. of some commodity before the change is 10s.,
the retail price 2d. per lb., or 16s. 8d. per 100, and that the
difference is made up by 2s. commission (including waiting for
paymeqt) for the brokers and wholesale merchants, 2s. cost of
transport, and 2s. 5d. retailer’s gross profit. Now let the wholesale
price rise to 15s. The cost of transport remains unchanged.
There seems no reason why the dealeiis should or could charge
more for any part of their services, except for the item of interest
(at 4 per cent, fo^ three manths, less than Id. additional), and
since they benefit by not curtailing the sale, they should charge
less rather than more. With them, as with the retailer, all
depends on tS^lasticity of the demand. If the demand for

No. 92.— VOL. XXIII. N N

516 THB BCONOMIO JOUBNAL [?>BC.

meat is more elastic than the demand for bread, there is a greater
inducement for dealers in meat to reduce their commissions than
for dealers in flour. If, in brief, all charge the same per unit
before and after the rise, the retail price would advance to 21s. 8d.
per 100, =2‘Gd. per unit, which the retailer would make by
charging first 2Jd. and then 2|d. Now on this hypothesis the
wholesale price has advanced 50 per cent, and the retail price
only 30 per cent. If, on the other hand, all persons concerned
charged the^same percentage on cost, instead of the same price
per unit, the retail price would advance by a greater percentage
than the w^holesale, the increment growing like a snowball. No
doubt all these commissions are decided in 'the long run, not by
what (iincombined) merchants and dealers wish to do, but by the
prices they must pay and can get in competition. So far as I
can see, theoiy^points to an unchanged remuneration per unit,
not to an unchanged percentage. ^But there is no doubt a custom
in each trade, and it seems to me the question calls at once for
investigation as to how in fact merchants and brokers calculate
their commission. When prices are falling, the same analysis
applies, except that everyone concerned will try to hold the price
up and the consumer’s advantage will bo delayed.

As regards retailing, it often happens that the consumers can
be divided into two classes, whose elasticities of demand differ one
from the other. Thus, a butcher can perhaps raise his price to
his day customers without much affecting the sale, but not to
those in the evening. In this case t]>e working class w’^ould suffer
a smaller rise than the richer class. This consideration applies
especially to the very large volume of purchases made late on
Saturday evening.^

When, as has been the case for many years, prices and interest
are rising en masse, much more difficult questions arise as to the
effect on brokers’, merchants’, retailers’, and manufacturers*
charges. If in the long run we have simply the case of replacing
a florin by half»a-crown in every transaction (wages, prices,
interest), there is no problem. ]lut if the rise occurred first in
wholesale commodities and w^as reflected only in part in retail
commodities and not at all in w’^ages or salaries, w^e should have
a troublesome problem, with innumerable actions and reactions,
into which 1 have neither skill nor space t^ enter. ] think, how-
ever, that as regards the period 1890^-1912, some conjectures may
be hazarded, as follow^s : changes in the rate of pure interest, on
cash involved in handling, can hardly have, made 1 per cent.

1 See ‘‘Food PricoB in London” : Charity Organisation%ooiety, 1913.

617

19J.3] WHOMSALB AND BBXAlIi PBIOBS OF FOOD

difference in price up or down ; cost of transport has varied little,
and efficiency of distribution has increased. Merchants, brokers,
and retailers were probably able to hold back for their own benefit
some part of the fall of wholesale prices during 1889-1896 ; during
the period of rising wages till 1900, they could hand on more than
the whole addition per unit ; but during the stationary period of
wages, 1901-1911, so far from handing on an equivalent per-
centage on the values handled, it must have been difficult to hand
on the additional cost per unit. * y

The general conclusion I reach is that retail ^nd wdiolesale
prices should be connected by an equation of the form : —

Actual change of retail price per unit goods = ac/aa/ change
of wholesale price per corresponding unit x fc, where k is nearly
equal to unity. •

If k is equal to or not much greater than Iv thi.s equation will
result in : —

Percentage^ change of retail price per unit goods is less
than percentage change of wholesale price per corresponding unit.
The movement of retail price is presumably a little later than
that of wholjisrle,

I think that we must accept retail price statistics with con-
siderable reserve till the details of the theory now sketched have
hi en worked out, and the necessary facts ascertained ; for as will
be seen from the following statistics, tliere is no uniformity of
relation, and on the wdiole too much effect appears to be produced
on retail by changes in wholesale prices. ThCi.e can be no doubt
as to the direction of the general movements, but the magnitudes
of these movements cannot be regarded as certainly known.

The most adequate statistics of retail prices are of bread in
relation to flour and grain. I have exanuned the monthly records
from January, 1906, to June, 1913, as tabulated in the Labour
Gazette, of the import and English Gazette prices of grain, and of
flour as delivered from the mills, and of the mean of the predom-
inant prices of 4 lbs. of bread obtained from nearly 170 reports from
the principal towns of Great Britain. I am informed that in
modern roller milfs the weight of flour obtained averages less than
72 per cent, of the weight of grain, while that of stone-ground flour
is 80 per cent. Taking 72 per cent., •a quarter of grain yields
346 lbs. of flour. Now 346 lbs. of flour yields 500 to 550 lbs. of
dough, which makes ^160 to iiOO lbs. of bread, the modern average
being nearer the higher limit. From these data it results that a
4-lb. loaf contains 2*83 lbs. of flour, which are obtained from 3‘93
lbs. of grain. During the period taken the average price of grain

N N 2

618

THE EOONOlflO JOHENAI*

[DEO.

(taking 6 cwt. imported with 1 cwt. home) was Ss. Id. per cwt.,
of flour lls. per cwt. , and of bread 6‘6d. per 4 lbs. ♦ The flour
obtained from 1 cwt. of grain is thus worth very nearly the same
as the grain, the value of the offal paying for the expense of
milling.

First take flour and bread. The average cost of the flour in
the 4-lb. loaf was 3'33d., and therefore the ^average cost of trans-
port and cost and profit of merchanting, baking, and retailing
was 2’27d. If the latter costs remain constant, while the price
of flour changeV- we should have —

Price of the quartern loaf = 2-27rf. + 3-33d.

No. o'jL loaves per cwt.*

Sucli relations can be examined by two methods, viz., by the
comparison of the standard deviations of wholesale and retail
prices, and 1)5/^4110 coefficient of correlation between them. In
the present case Tiie standard deviation for the ninety monthly
prices of the quartern loaf is 0'35d., the average price being 5‘6d.,
and the standard deviation of the prices of a cwi. of flour is
13*58d., the average price being lls. ; for the loaf and for flour,
therefore, the standard deviations are respectively 6’2i5 per cent,
and 10’29 per cent, of the average prices ; in other words, so far
as deviations are concerned a^change of 10 per cent, in the price
of flour corresponds on the average to a change of 6 08 per. cent.'
*in the price of bread. Now 10 per cent, on the price lls. is
0*333d. per loaf (taking 39’6 loaves to the cwt.), and G’08 per
cent, on the pricd^5’6d. is 0*340d. per loaf; the two numbers
correspond very closely ; it they were exactly equal it would mean
that an addition to the price of flour was carried on unchanged to
the price of bread, and that charges for making and distributing
were unchanged. The diagram is drawm so that the average
prices are represented by the same line, and a deviation of 1€ per
cent, in the price of flour is measured by the same height as one
of 6 per cent, in the price of bread. The bread price on the first
w^eek-day of each month is put in the same vertical line as the
flour price of the previous month. Except for the lag in the rise
of the price of bread in the middle of 1907, and for the excep-
tionally high price in May, 1909, it is seen that the bread price
keeps very close to the flour price, but changes less frequently.
The bread prices, however, are only averaged to of a pennj,
and no change less than one-fifth of an inch on the scale is
registered.

The co-efficient of correlation between these prices is 0*947.

1 Viz. 89*6.

Monthly Prices of the Qua7*tem Loa/ x x x x and of Flour

1907 1900 1909 I9|0 1911 1912

S20

THE ECONOMIC JOUBNAL

[DJBO.

This coefiEicient measures how closely the bread price can be calcu-
lated by a linear formula from the flour price. ^ Ii> this case,
however, a slight error is introduced from the omission of the
second decimal place in the bread price.

These two measurements, by comparison of standard devia-
tions to test in what way a change in wholesale prices is carried
on to retail prices, and by correlation to find^how far other causes
are also at work are used in the following table : —

r”

4. 1 6.

Standard
deviations
per cent, of
average prices.

<D O

cic*n

0) ^
cO oj
aO It o
h 03 ^

Ratio of

1 to 2.

Ratio of

5 to 4.

o ,

C3 O

.2*13

> ‘5

O pu

Retail.

Whole-

sale.

U o

(a) Bread and flour

6*0

3*33

•

10 : 5 *95

6*26

10*29

10 : 6*08

0*948

(5) Bread and grain

*50

3*40

10 : G*1

G*25

9*11 '

10 : 6*85

0*943

5*84

3*07

10 : 6*03

10*0

17*G

10 : 6*02

0*863

\(i) Bread and grain

6*5

3*23

10 : 5*6

7*2

11*1

10 : 6*5

0'91

i*:i5

1*23

10 ; 9*1

9*32

10*6

10 ; 8*8

0*88

(/) Beef ... per lb.

8*1

5*22

10 : 0*44

5*2

9*2

10 ; 6*6

0*99

ig) Mutton ,,

9*4

618

10 : 6*57

6*0

11*3

10 : 5*4

0*85

(h) Potatoes ,,

0*73.5

0*398

i 10 : 5*41

9*7

12 6

10 : 7*7

0*69

(i) Bacon ,,

8 *33

6*58

|« 10 : 8*14

10*2

11*8

10 ; 8*65

0*92

ij) Sugar

1*85

1*05

10 : 5 7

13*2

14*4

10 : 7-8

0*90.

{k) Butter ,,

13*3

11*2

10 : 9*02

3*3

5*9

10 : 6*6

•0*94^

(/) Cheese ,,

8*5

5*45

10 : 6*4

6*35

10*4

1 10 : G'l

0*82

(5;i) Eggs per doz.

12*0

8*5

10 : 7*0

6*5

9*8

10 : 6*63

0*94

(n) Food budget ...

% d.

u' 0

I s. d.

I ^ 1

10 : G-8

4*56

6-70

10 : 6*7

0*94

Line (a) in this table exhibits the numbers just discussed.
Line (b) shows the relation between bread and grain,^ for the
same ninety months ; as already stated, the quartern loaf uses
3*93 lbs. of grain, and at 8s. Id. per cwt. (the average price of
grain in the period) this gives 3’40d. for the value of grain used
in the loaf, as in column (2). That the flour costs slightly less
than the grain is due to the fact that the vaj..ue of offals was

^ The formula in this case is —

Excess of bread price above b'(Sd. = '0244 of (excess of flour price above 11s.), where
both prices are stated in pence ; 0*0244 is the coefficient of correlation (viz. 0*948)
multiplied by tlio ratio of the standard deviations (viz. 0*35 : 13*58). This equation
would give the closest fit in a diagram (by method of Ictist squares) ; that drawn,
however, uses 0*0254 in the equation which is vSry nearly the same. With small
correlation the difference would he considerable.

® Price of imported and home grown wheat are averaged in the ratio 6,: 1 for
lines (fc) and {d). *

621

19133 WHOIiESALB AHD BETAIIi PBIOE8 OP POOD

rather greater than the cost of milling. The correlation between
the prices of bread and grain is practically the same as between
bread an^ flour. In nearly all the months the price of a
quartern could have been calculated nearly from the formula :
“when wheat is 80. Id. per cwt. the quartern loaf costs 5‘6d.,
and a change of 4s. lOd. in the price of wheat makes a change of
Jd. in the price of the quartern.” Line (c) shows the corre-
sponding numbers for the annual averages of the price of the
quartern in London ^rom 1881 to 1910 (Fourteenth Labour
Abstract, p. 137) and the Gazette price of wheat^, '

In lines (d) to (m) the retail prices used are the index-numbers
of London food-prices for the fifteen years 1890-1910, published
by the Labour Department .^ The average prices for this period
are deduced with the help of the workmen’s budgets given iri
the Second Fiscal Blue-Book (Fd. 2,337). The wholesale prices
used from (d) to (/) are those ^employed by Mr. Sauerbecl: Ixi Mie
formation of his index-numbers^; for (/) and (/f) import prices
were taken. fPor (n) the quantities from (d) to (m), together
with tea,^'* are combined year by year in the proportions used by
the Labour Department.

The correlations, shown in Column 7, between the wholesale
prices are high throughout ; it woyld be expected that potatoes
stiould show more variation than other commodities, since
Mr, Sauerbeck only deals with imported potatoes. It is, however^
improbable that refnil prices, in the smaller sho))s at any rate,
are so clearly coniie(d(xl with wholesale prices vs these coefficients
suggest. These are rather the coefficients \ e should expect in
large stores, from which, in fact, it is believed the prices are
principally obtained.

Now concentrate attention on Columns 6 and 3. If retail
prices moved exactly in proportion witli wholesale the ratios in
Column 6 would be 10 : 10 ; actually they are less in all cases. If
the actual changes in wholesale prices were carried on, all ex-
penses of dealing and transport remaining constant per unit, the
numbers in Column 6 would be equal to tliose in (Column 3;
this 18 nearly tlfb case with flour, bacon, cheese, and eggs. If
the intermediate costs varied in part with the wholesale price,
the second terms in Column 6 would be greater than those in
Column 3 ; this is the case with potatoes and sugar. If the inter-

^ The tea and sugar '^-uties are subtracted from the retail prices throughout
the table.

2 Middling beef and mutton are taken, and Gorman beet-sugar.

» Tea is not *ncluded in the table because its retail price has moved apparently
only when the duty h5s altered ; no doubt the quality varies.

522 THB EOOKOmC JOUBNAZi [SBC.

f’

mediate costs varied inversely as the wholesale prices, tending
to keep retail prices steady, the second term in Column 6 would
T>e less than the corresponding term in Column 4 ; this^s the case
with beef, mutton, and butter.

The absence of a uniform rule suggests that there is a good
deal to be explained in these statistics.

If we study the recent report on Rents a^nd Prices in 1906 and
1912 (Cd. 6,955), we find that even this apparent order is re-
placed by chaos, and also that there is something arbitrary in the
process of calculation. I do not wish to examine minutely, still
less to criticise, this admirable and interesting report, but only to
point out the w'ay in which uncertainties arise. The general
increase, stated for the price of bread from October, 1905, to
October, 1912, is 15'3 per cent., wdiich is also the change shown
for the middle zone of London. This last is obtained by
avv.. caging prices varying from 4|d. to 5Jd. in 1905 and others from
5Jd. to 6d. in 1912. The average for the year in London in 1905
is otherwhere^ stated as 5'5d. ; the price on OctoCer 31st, 1905,
happened to be specially low^ Now’ the recorded rise in other
towms during these eight years varies from nothing in Bristol
(6Jd. at both dales) to l^d. at Liverpool (4^d. to 6d.), which is
quite inexplicable. A doubt jis to the price of a quartern to the
extent of Jd. makes 10 per cent, difference to that price, and
2 per cent, difference to the general price level , Id. in the price
of meat makes a similar difference. It is only w^hen general
averages are takei^ that these irregularities appear to be unim-
portant, and it is q^te doubtful whether the process of averaging
completely removes them. For these reasons it is specially
necessary in the case of retail prices not to emphasise the
statistics of particular years or particular towns, and in the end
not to regard the measurement as exact.

When w'e put the data of lines (r) to (m) together and obtain
(n), we find an improbably high correlation betw^een wholesale
and retail prices. We have also the surprising, but not im-
possible, result that^the change in wholesale prices per unit
(together with duties, which are eliminated froiu the table) are
on the average exactly carried on to retail prices, without
addition. The regression equation for index-numbers suggested
by this line is : —

Retail index-number - 100=^4^^ 0*94:i= 0*64 ^ of (wholesale index-

6TU

number - 100) ,

^ XIV th Abstract, p. 137.

1913] WHOLESAtiK AK1>, BETAIL BBICES OF FOOD 623

where both numbers depend on ten Icinds of food and are weighted.
In the following table Column I shows the wholesale index-
numbers (Sauerbeck’s and import) averaged, Column 2 the result
Of the equation just written, Column 3 the retail numbers com-
bined for the ten commodities, Column 4 the Labour Depart-
ment’s London retail food index-number, including other
commodities, when te^ and sugar duties are eliminated : —

1896

138

1897

1898

1899

1900

100

1901

... • 97

100

1902

100

1903

101

1904,

302

101

102

1906 ... ...

102

101

100

102

1906

101

1907

107

. 104

104*

1908

110

106

106i

1909 ...

111

107

3 06*

106

1910 ... . .

112

108

The differences between Columns 2, 3, and 4 are wdthin the
natui J unceitainties of this kind of calculation.

There is, of coiirse, no guarantee that this relation between
^wholesale prices and the retail prices, as estimated for London
by^the Labour Department, existed prior to 1896, nor that it
will continue. In the nature of things interme'diate costs cannot
remain constant. The details behind ilie Jivc-'^gos are so variable
that this apparent constancy may be partly a^^idental. It is not
even probable that the same result would aj)p»^ar in the average of
provincial towns or of rural districts, and tne Labour Depart-
ment’s Deport shows that the change of prices 1905-1912 varied
greatly from town to town. Nor do 1 think that these retail
price movements are at all necessarily those that would be found
in all districts or among all classes in London, for reasons already
outlined. But the closeness of the relation ^ound with that which
would arise, if intermediate costs were unchc^nged, is so remark-
able to make iib important to place it on record.

A. L. Bowlby

T,HE ANCIENT COINS AND CUERENCY OF CHINA.

Though cVina is the oldest nation in existence, and, as 8\ich,
is the very place where economic students ^can obtain the most
abundant materials as to the origin of money, yet owing to the
difficulty of language only a minute part of her useful materials
*has been translated into Western languages. Even that part of
the ’''materials which has been translated into European languages
is not really correct, owing to the* lack of proper investigation or
to the misinterpretation of terms. •

Nowadays, the use of gold, silver, copper, and nickel coins is
most prevalent, but if we study the history of coins we will see
that primitive people did not use them. Metals are un-
doubtedly most suitable for coins, but they are not found in a
pure state, and hence primitive people could not obtain them.^
They are concealed in tlie heart of the earth, and, even if tlley
are found, some amount of refining is necessary. Thus we may
be sure that the use of metals as coins is also one of the signs
of civilisation, for^o backward jieople can apply such mining and
chemical processes.

All primitive peoples adopted materials of daily use as coins,
and to this China is no exception. The following were the seven
kinds of materials used by the ancient Chinese as coins and
currency, the use of which is recorded in many ancient works :
(1) shells, (2) tortoise shells, (3) skins of beasts, (4) domestic
animals, (5) pearls and precious stones, (6) corn and pieces of
cotton and silk clotl/’ (7) inst.ruments of daily use.

The use of the above-mentioned materials «is coins has been
recorded in all historical and economic documents written before
the birth of Christ. But I must add that some of them were used
side by side with metallic coins. I will discuss them in order,
thus : —

1. Shells:

All ancient peoples dwelling at the sea-coasts were accustomed
to use shells as coins, or, rather, as a mectium of exchange,

525

DEOj, 1913 ] ANCIBKT COINS AND OUBBENOT OF CHINA

because they were very common ; and we know that even to-day
the people 0 / the South Sea Islands are still using shells as their
coins. But the ancient Chinese used shells more than any other
people, and the reasons why they preferred shells are as
follows : —

1 . The shells have a peculiar lustre ♦ which all primitive

peoples liked. ^

2. They are very durable, and hence are suitable for hoarding

with'but affecting their value, ^ •

3. They are very jx^rtable as their size is very s^paall ; and also
they can be easily counted. The value of a single shell can
satisfy the smallest •transaction, and their multiplication can

* satisfy larger exchanges. Hence they are suitable foi the medium
of exchange.

4. By comparing the shells you can class them into v^lnou8
grades according to their quality, and hence ypu can Jiaw

of various values to satisfy various exchanges. ^

5. They are natural products and are not quite easy to get,
and thus their number cannot be greatly increased by human
effort so as t ^ affect their value. The result, of course, is the
comparative stability of their value.

6. Though it requires some laboair to obtain them, yet it is
so difficult and costly as metals, and hence they are more

suitable to the ancients, who had a certain degree of civilisation,,
but not advanced enough to apply chemical and mining processes
with a view to obtaining metallic currency. ^ . '

For the above-mentioned reasons, all tl^ primitive people
appreciated the use of shells as currency, and especially the
ancient Chinese. When Emperor Whang-ti established his
empire about 3000 b.c., the capital was at the source of the Yellow
River — the present Chen Chow Prefect in Honan Province.
Then they gradually extended their footing along ihe river banks
to the Yellow Sea, until about 2100 b.c. l^hnperor Yiao estab-
lished his capital at Chao-Chow Prcfe^iL of the Shangtung
Provinpe. Thus the use of shells as currency was quite natural.

Now let me examine some ancient documents to prove the
truth of my statement with rc^gard to shells. In the ancient
dictionary of Shili-veng, shells are def^ril^ed as follows : ‘'They
a>e a kind of sea insect, living both in water and on land. The
ancients used shells <fs currency and torioise shells as treasure.
At the* beginning of the Chow Dynasty, about 1200 b.c., metallic
coins were in^^rodneed, and were used side by side with shells,
until the establisHment of the Chen Dynasty about 300 B.c.,

526

mommc mvmjOi

[mo.

then ehelle were discarded from the currency/* Ftotn the above
authority we see quite clearly that during the long ^riod before
the founding of the Chow Dynasty, shells were the sole currency
of China, and even after the Chow Dynasty they were still used
side by side with metallic coins. It was only after the domination
of Emperor Chen in the third century B.c. that they were driven
from circulation, and then metallic coins tj^ook their place.

If we examine the formation of the Chinese characters during
that time, I w^e find that a}l economic*' words, whether iftuns,
verbs, or adjectives denoting wealth or money, contain the ideo-
graphic sign denoting the word “shell ” as a component part of
the whole character. Here I wdll give some examples as
followiS : —

1. Decoration or to decorate : from this we know that at the
very beginning shells were used for decoration, and later on they
becauii. a ^medium, of exchange.

2. Wealth : (or in ancieni times a man’s wealth was counted
by shells.

3. Goods or things : for everything that has an exchange value
can be counted by shells.

4. Congratulation or to congratulate : that is to say, when you
congratulate a man, you give him a present w^hich can be counted
in shells. In the same sense, the word to praise also contains
the ideographic sign denoting “shell.”

5. Dew aid or to reward : all rewards were given either in the
form of pi esents, which were exchangeable in shells or directly
given in shells. ^

6. Profits : all profits w^ere counted in shells as we count in
metallic coins nowadays.

7. Debts : all debts weie recorded in shells.

8. Accumulation or to accumulate : they accumulated shells
as we accumulate coins.

9. Capital : shells being medium of exchange could serve as
capita] to a man.

30. Pledge or to pledge : they pledged in the form of shells.

11. To redeem : all redemptions w^ere madd in shells.

12. Expenditure : all expenditures were kept in the form of
shells.

13. Price : it was quoted in shells.

14. Buying and selling : as all payments were made in shells.

15. Dear or noble : costing a lot of shells, or possessing a lot
of shells.

16. Cheap or mean : worth few or no shells.

627

1913^ TS» ANCIBNT COIKS AHD OXmBBJTOT OF CHINA

17. Tax : people paid tax in shells.

18. Greedy : coveting shells.

19. To hire : paying wages in shells.

20. To bribe ; paying bribes in shells.

The above twenty words are, of course, only some of the

words formed from the ideographic sign denoting “shell,’* and
from them we can drgjgW the conclusion that the use of shells as
currency was very prevalent, and also that it lasted for a con-
sideiable period of time, btherwise tl\ey would not ha^/e been abte
to influence the Chinese language so much. Then, ^;ain* we have
numerous examples in ancient literature, where they use shells
to denote a man’s wetilth, as we do at present in taels, pounds
sterling, dollars, or francs.

The ancients u-id them generally in pairs, that is, by tying
two of them with a piece ol llueaJ. A pair of shells was called
a “Beng” — literally, a fiiend. . Later on, wh>‘n “ Tap. 3.7 one v ”
and metallic coins wmc introduced, they bored Ijoles in them, so
that people coiifd tie them up as they did with shells. Even
to-day the Chinese are still accustomed to tie J ,000 cash by passing
a piece e** strmg through the holes to form a “String.”

Of course, we must take note that the economic words given
above did not arise at a certain defiwite period, but extended all
owes the Hsia (2300 b.c.), the Sheng (1800 b c.), and the Chow
(1150 B.c.) Dynasties— from 2300 b.c. to 800 b.c. This alone
gives us a definite idea of the long duration of shell currency
in China.

2. Tortoise Shells.

The use of tortoise shells as currency has been recorded in
numerous ancient books, from which T make a few quotations : —

1. An ancient dictionary says, “The ancients used shells as
currency and tortoise shells as treasure.” This tells us that they
were used only in exchanges of great valiv»

2. The Book of Kites says, “The leu 'ords all consider
tortoisn shells as treasure.”

3. The Book of Hans says, “Currency comprises cloth, ‘tao ’
(knife money, which I T\ill discuss later on), tortoise shells, and
shells.” In the same book it is alsoi recorded that when the
Chen Dynasty annexed all the feudal kingdoms about 300 b.c.,
the use of tortoise shells aud shells as currency was prohibited.
Thus, it is quite clear that before the advent of the Chen Dynasty
the use of tortmse shells as currency was very prevalent.

Doo Shu, an ancient writer, supposed that the use of tortoise

628 THB ECONOMIC JOXJBNAL f0EC*

"shells as currency was started at the time of femperor Shing-nun
about 3600 b.c., but up to now we are unable to fiijd documents
to prove the truth of his statement. •

4. The Book of Changes says, ‘‘Give him ten * Bengs * of
tortoise shells” : that is to say, give him a piece of tortoise shell
worth ten pairs or bengs of ordinary shells — 20 ordinary shells.

The reasons why the ancients prefei;red tortoise shells are
threefold : First, they are very durable, and hence suitable for
durrency. 'Secondly, they aye more difficult to get than ordinary
shells, and h^'nce more valuable. Thirdly, they are divisible,
and hence more convenient for exchanges than ordinary shells.
But owing to the second reason, they were' not so widely used as
ordinary shells, for they were too valuable for ordinary trans-
actions, and owing to the third reason, their value was not so
^ stable as ordinary shells, for, once divided, their great value was
imraeijo^-lj diminished.

1 must add that tortoise shells were also used by the ancient
Chinese fortune-tellers to predict a man’s future prosperity
or adversity. T suppose that those tortoise shells could be used
for predicting futures as well as for a medium of exchange.
Sometimes they were used in their entirety, and sometimes they
were divided into small pieces to satisfy various kinds of
exchanges.

At the city of Kon-yiu-li, in the Province of Honan, thousands
of pieces of tortoise shells were dug out from the earth in the
twenty-fifth year ^of Kwang-shu of th(^ late Marichu Dynasty
(about 1899 A.i).)^''y a man surnamed Wong. By examining the
characters carved on them, we know that they were stored up as
early as the Ying Dynasty (about 1800 b.c.). From this fact we
know that the ancient Chinese used them as currency over a
long period.

3. S^ins of Wild Animals,

The most suita^}< and convenient article for currency in the
Hunting Age was ^undoubtedly skins of wild animals, as they were
the very material which all peoples of that period valued. They
could be used as material for clothing as well as a medium of
exchange, because they were comparatively durable, and their
quality and quantity could be easily detected by those primitive
peoples. We find many instances in all anfcient histories.

In our country, however, the invention of written language
came after the passing of the Hunting Age, and hence we .cannot
find so many instances of their use. Nevertiieless, we do find

529

1918] THE ANCIENT COINS AND CDRBENOX OE CHINA

some instances in our ancient literature of the use of skins of
wild aiiimak as currency.

Thpse books which record the use of skins of wild animals
as currency, a\l agree that they were used only for exchanges of
great value or for presents ; because after the passing of the
Hunting Age skins became very scarce and their price rose con-
siderably, with the result that they were only used by emperors
and nobles on great occasions.

Ih the Book of Bites it is recor^ded that the skins of tigefs
and leopards were used as presents between emperors and feudal
lords, and between lords and lords, and that the skms of deer were
used as presents betv\»een lords and ambassadors and ministers of
* State. It is also recorded that certain excises were sometimes
paid in skins of d^"” . .

From the Chen Dynasty (about 300 b.c.) onwards hunting
was almost abandoned, and henijo the value of gkins wg^ ..^nsider-
ably enhanced. Then, again, it was also at ^that period that
metallic coins ^'^ere largely used in the market, and, for these two
reasons, skins of wild animals were driven out of the realm of
currency It is recorded in history that Emperor Wu of the
Han Dynasty (about the beginning of 200 b.c.) ordered a piece
of white deer skin of one square foot in size to be made, and it
*wag valued at 400,000 cash, or about 400 dollars of the present
currency. He forced all princes and noblemen to use it, but
without success.

4. Domestic A7iimals.

Domestic animals were generally used by the ancients of most
countries as a medium of exchange, as the history of those coun-
tries usually begins in the Pastoral Age. But in our country it
was not so, for China bad passed the Pastoral Age when her
authentic history begins. The authentic history of China begins
at a time when agriculture was the predk)minant industry of the
country. However, if we examine the a., dent documents, we
can find some instances to prove that the use domestic animals
as a medium of exchange was also practised in ancient China.

Mencius mentions in one passage that the grandfather of the
founder of the Chow Dynasty paid tribute to the tribal head of
Shen-si by means of skins of domestic animals, pearls, precious
stones, dogs, and hordes. I'his fact gives us at least some idea
that domestic animals could be used in paying tribute, and we may
infer that they could also be used as a medium of exchange.

Then, again, vflien Emperor Wu of the Han Dynasty, about

630

THE ECONOMIC JOUBNAL

[BBC-

240 B.C., ordered the mictage of metallic coins, the image of a
horse was struck on the face. We may reasonably infer from this
that domestic animals were used as currency by the ancients,
and consequently Emperor Wu struck the image of a horse on the
face to give to his coins an historical value.

6. Pearls and Precious Stones.

The use of j)earls and precious stones as a medium of excl^p-nge
is perhaps* too inconvenient», as they are too valuable and too
delicate. Coni^eqiiently , their use was limited only to exchanges
of very high value, and was confined to the nobles and merchant
princes.

We may here mention two instances from ancient documents
• to prove that they were used as currency in ancient China.
,Kwun tze, the eminent ancient economist and statesman, says,
“The ’&,?T^ivnts considered peails and precious stones as first-class
currency 'Jhe*Iiook of Han says, “Pearls anc^ precious stones
were not considered as a kind of currency, when the Chen
Dynasty absorbed all the feudal kingdoms about 300 b.c.”

hroni the above-mentioned two instances it seems that pearls
and precious stones were used as currency by the upper class of
the ancient Chinese during a considerable peiiod of time.

6. Corn and Pieces of Cotton and Silk Clorh

The ancient Chinese were accustomed to use corn and pieces
of cotton and silk cloth as media of exchange, and their use is
wudely discussed in mimerous documents. Those materials were
regarded by the ancients as having two quabties, namely, as
directly consimiable coiiiinodities, and also as media of cx-
c ange. Here I will give some examples from Chinese ancient
documents to jirovc the truth ol this statement •-

1. The Book of Chow says, “The duly ot the county office • is
to gather corn both j|^m open fields and from suburban lands

national expenditures.’^

to mil, ‘f ‘'”*5’ »' '*'» '’O'O'iel- <ac«r is

3. Jhe same boo\ also’savs, “The dut’ of fhe rH-rr^/r ■ x

4. The same book further says, “The dntv nf lu i- • x

531

1913} IHB AMCIBNI OOIKS OmOtBVOY 07 CHINA

kinds of natiojaM etitrency, whidb may consist of corn, cloth, and
metallic coins/*

. The^ use of corn SrS a medium of exchange was quite prevalent
in normal years, but in times of national calamity metallic coins
were introduced to take its place. Now let me mention some
examples from ancient literature to prove the above statement ; —

1. Chen Chong, the eminent ancient writer, says, “In times of
famine and flood, commodities became very dear. But gold and
copper have no famine ysar. Therefore, whenever the price of
commodities becomes very dear, then* gold and copper coins must
be minted in large numbers to enrich and relieve tile people.’*

2. The Book of Koh-Yuen says, “In times of famine and flood
the ancients used to coin large numbers of gold and coppef coins
to relieve the people *’ ^

3. Kwan-tze said, “During the five years of flood, Emperor
Tui, about 2295 b.c., minted the gold of Lih-san int^ mins to
relieve his people’s poverty, and during the seven years* drought
Emperor Tang,*^bout 1760 b.c., minted the gold of Chong-san
into coins to redeem his people who sold their children for food.**

From the a^ oA^e-mentioned passages it is quite clear that
whenever the price of commodities rose extraordinarily high, then
gold and copper coins were minted tq relieve the situation. But
lihis^method is contrary to economic laws, for the more coins you
have put into circulation, the less will be their purchasing power ;
or, in other words, the price of commodities will rise still higher.
Now how can we account for this peculiar method, adopted by all
ancient Chinese, of minting large numbers o^f gold and copper
coins whenever famine and flood occur? If we bear in mind
that corn was used by these ancient Chinese as medium of ex-
change, there will be no difliculty in accounting for that peculiar
method. Every year at the time of harvest, the government
oflScers collect a part of the corn from various sources for the
public treasury to be put into circulation, the rest of the corn
would be used as food for the people, v in times of famine
and flood, when corn would not be obtained fi m the fields, then
the prices rose coflsiderably owing to scarcity. -Jiut the people
could not dispense with their food, and consequently that part of
the corn which had been accumulated^ from time to time, and
which had been put into circulation as a medium of exchange,
must return to fulfil its proper function, i.e., a means of subsist-
ence to the starving people. In order to withdraw corn from
circulation, the ancient Chinese then minted large numbers of
gold an^ copper coins to take their place as a medium of exchange.
No. 92,-i|fOL. xxin 0 0

THE BOONOMIO JOtJBHAt

58i’.

It is precisely the same method adopted by all modem financiers
and statesmen— that is, to issue more paper monel' with a view
to pacifying the excited public and to relieving the meney piarket.*
The use of cotton and silk cloth as m^a of exchange was
very prevalent in China, and lasted for a considerable period of
time. It was even reported that their use was started long before
the Tang and the Yui Dynasties, about 3000 B.c. ; but of this
statement we have no authoritative proof. What we do know is
that they* were widely used during th® Golden Ages, the feudal
times, the Chow Dynasty and the subsequent dynasties, until the
Ming Dynast^ (2400 b.c. to 1466 a.d.).

I will now examine certain documents to prove the method
adopted by tlu) ancients with regard to the use of cotton and silE
cloth as currency. The Book of Chow says, “The duty of the
city officer is to collect fines from those houses which do not
cultlVHtr^, lands in^thc form of clqth, called Li-pu.”

Chen Chon^, an eminent ancient writer, says. “Li-pu, or
cloth ))H]d lor fines, is a piece of cotton or silk floth of two tsah
m length and two lm,g in width, with official seals on it.” It is
the f’li-inoney, or cloth money, and is called a.fovg.

In the miscellaneous articles of the Book of Bites, the follow-
ing tables of measure for ordinary cloth and for money cloth were
recorded : — c

10 tfiOllgrrltfiah

2^ Zmg=ri Kun
2 Kun z: 1 Liang or p’ih |
5 or p’ib = J Boh

-Meapure for ordinary cloth.

4fongr-lZing ^

fi irlh®= 1 Hoh jMcasure for oloth-moaey.

Now from the second table we see that the standard of Pu-
money was hang, or p’th, and its subdivision was fong which

preM. meroh.Bl princr*

piece. That ts to say, each piece of the

58S

19131 ANOIBNOJ corns Al»l> CtTKEKNOT OF CHINA.

said silk cloth was sold at 100 Kangs of ordinary Pu-money by the
seller. •

, Ordinary* shells, tortoise shells, and skins of beasts are all
natural products, arit consequently they cannot be made exactly
to suit the various exchanges of the ancient people. Though
ordinary shells and corn are small in size, and as a result can be
increased ^and decreased by means of a scale so as to suit all kinds
of exphanges, yet the method of weighing was too inconvenient^.
Thus they were not so widely used^by the ancient Chinese as
Pu-money, which is an artificial product and can b^ made to any
size and form as they like. The convenience of Pu-money was
clearly seen by the ancients, and consequently it was 'videly used
for a considerable period of time. Wljcn metallic coins were
mjinted at a later date they were still called Pu-money, and that
fact alone shows us clearly the importance of Pu-money in those
times. • *

Another instance to show the importance in ancient China of
Pu-money is the retaining of the character hang, the standard
of Pu-money in the later silver currency. The standard of the
present Chinese silver currency is hang, which is the same
character as the standard of Pu-money. Though the Europeans
Vanslated the character hang of the* silver currency into tael,
yet in Chinese it is exactly the same. When Emperor Chen of
the Chen Dynasty minted metallic coins about 253 b.c., he named
them half-liang; that is to say, each metallic coin was equal to
one half hang, or ten fongs of Pu-money.

The ancient Chinese were very particular with regard to Pu-
money, and as Chen Chong, an eminent ancient writer, slated,
each piece must bear three official seals on the face to avoid
forgery. The Book of Kites says, “Cloths which are not uniform
^ in fineness and which are not uniform in width are not allowed
to be circulated in the market.” Thus we see that the right of
mintage was reserved to the Government^ ^en in those times.

Again, we must bear in mind that as a fong of cloth was only
two tsah*in length ‘jnd tw^o tse^ig in w^idih, its * as ordinary
cloth was out of the question. The tsah of the Chow Dynasty
was only eight tseng of the present Chinese measure. Therefore,
^one tsah of the Chow Dynasty is about llj English inches, and
one* tseng is about 1 3/25 English inches. From this we know
that the length of one fong wjs about 23 English inches and the
width was about 2 6/25 English inches. Thus, they were
specially made for circulation as media of exchange.

Throughout the eight hundred years of the Chow Dynasty —

0 o 2

684

THB SOONOWO JOUBNAL

1100 B.c. to 300 B.C.— Pu-money was the most impor^^t currency
in China, and we may, indeed, call that period th^ age of cloth
standard. Though other materials were also circul&ted «de by*
side with Pu-money, yet they were of miaw importance. Thus
the use of Pu-money was special to China, as silk and cotton are
two of bP7 most important products. With the advent of the
Chen Dynasty, 300 B.c., metallic coins weje introduced, and other
materials were driven from circulation; but the Pu-money re-
mained the same, until the.beginning of the Ming Dynasty about
1466 A.D., assail official salaries before the Ming Dynasty were
recorded in terms of liatigs of silk cloth.

7. Instruments of Daily Use.

About the beginning of the Chow Dynasty it occurred to the
ancient Chinese that for the purpioses of exchange it would be
advaniaj^bous to substitute for various objects of daily use, such
as knives, hoes* sickles, spades, &c., small m^al models which
miglit represent the objects themselves.

With this end in view they coined many pieces, representing
the most common agricultural implements which everybody used
during the agricultural age. We find many ancient, coins
rtsembling hoes, sickles, and spades, and they v’ere also named
after them.

But if we bear in mind (hat China was at (hot time under
the sway of feudalism, we will understand that war implements
were (he most important objects which everybody wished to
possess, for inteAecine war was no uncommon occurrence. Now
the art of manufacturing war implements was known only to a
few people, and consequently the rest of the community was
anxious to exchange them wdth other articles. Gradually thev
became the common medium of exchange, and later on when
metallic coins were introduced, their shape and name were stUl'
used. Among the/lhcient war implements the swords were

Iffie first Tao money was struck by the Grand Duke of Tsi
the founder of the kingdom of Tsi (Tsi is the present Chins
chow Prefect of the rnodern Shang-tung Province) during
reign of Emperor Wu of the Chow Dynasty, about 1120 bI *

aCt 7“ It. “ ™ ’’ weighed

«.i .word, wUd. w.. too taconventot io orWt^L,

535

1913^ IHB ANCIBK'C OOIHS AND GltJBBBN07 07 OSINA

Biat the Tao money was also too long to be used in
tAmsaotions, , and so gradually the blade of the sword was
‘shortened, And only the handle remained. At the same time,
the end of the handle, which was pierced by a hole, so that the
coins might be strung on a cord, was enlarged. This change took

place sometime in the Han Dynasty, but we have no proof as
to the exact date.

Figure 2 represents the Tao money as used and re-formed by
the people of the later period. However, the handle of the Tao
money was still too long for daily transactions, and so another

• ■pio 3. — Cash as used at present

change took place. The handle was dropped, and only the end of
the handle remained. (See Figure 3.) When that change took
place we have no authentic date, but the new coins are still used
at the present time and are called cash (about 1/36 of a penny).

Our investigations, therefore, show that there were seven
kii^ds of materials* used by the ancient Chinese as media of

536

THE BOONOMIO JOTJBNAL

[rao. 1918]

exchange, but only three of them were of any inaportanoe, while
the rest served as subsidiary money only. The three importwit
ones were shells, Pu-money, and Tao-money. Shells w^e the*
sole currency before the establishment of the Chow Dynasty,
1100 B.C., and even after that time they were still used side %
side with metallic coins, until the advent of the Chen Dynasty,
300 B.c. I’u-money was the standard currency of the Chow
Dynasty, and it held sway in the subsequent dynasties in a
hissencd degree, until the advent of the Ming Dynasty, 1466 A.D.
It lasfed for a period of more than 3000 years. On the other
hand, the Ta^-money struck by the Grand Duke of Tsi about
1120 B.C., survived all the rest, and its reformed form is still used
at the present time. *

Chi Zang Waunq

GEBMAN EXPEEIMENTS IN FISCAL LEGISLATION.

♦ - -

In my article on .the “Taxation of Unearned Increment in
•Germany” (Economic Joubnal, June, 1911), I wrote as regards
the then newly issued Imperial Law : “The experiment of the
local administrative authorities has been transplanted into*
Imperial affairs, and in all probability it will be found necessary,
after many experiences, to undertake a revision of»fhe Act of
1911. In the jftieantime the complications of • the problems to
be solved will cause a great deal of trouble.”

This rerisior has begun sooner than anyone could have ex-
pected. The new Imperial Tax legislation (July, 1913), carried
in the Eeichstag by a large majority, has put an end to the Act of
*1911. The experiment of 1911 has been amended and superseded
by the experiment of 1913. Not only so, but within a very short
time more a new and far greater financial reform has been decided
on, which, in its turn, is of an experimental, though highly
important, character.

To explain this a few words are necessa/y in regard to the
financial evolution of the Empire. This evolution has been a
struggle against many difficulties : —

(1) The dual nature of the Parliament by whose consent the

new taxes are brought in — a consequence of the federal constitu-
tion of the German Empire. ^

(2) The difference in the mode of election to the two Parlia-

ments universal suffrage holds good for the Empire, but in
Prussia the suffrage is graduated according to' census, and
‘gives to the large ratepayers an overwhelming influence in the
elections. ,

. (3) Each of the two Parliaments has to weigh the opposition
of these electorates tonthe introduction oi any taxes. On simple
financial grounds the Empire has assigned a great preponderance
to indirect taxation. In the separate States, on the contrary,
direct taxation pre}:'onderates. A parliament elected by universal

638

IHB BOONOHIO JOUBMAXi

[DBO

suffrage refuses its coii8ei»t to indirect taxation with as much
opposition as a parliament whose suffrage is deternamfed by the
census is likely to show to taxes which chiefly touch the wellfto-do
classes (such as income taxes, property taxes, &c.).

(4) In the two Parliaments, but particularly in the Bei^hstag,

the first conditions of parliamentary government are lacking, t.e ,
two ruling parties, which change places according as each obtams
a majority in the elections upon which it can rely In Grermany
the individual States, and paiticularly the Empire, must rather
expect to find at the close of elections and after legislative expen-
inents party m^orities which can only occasionally last for more
than a year or two *

(5) I'he (litticullv does not only he in the large number of
fiartif '• It IS added to by the character of the parties them-
selves Economic, nationalist, clerical, constitutional, and
Utopian te«dencies^ divide them oiie from anothei More than a
quarter of The rnembeis of the lleichstag belong to the Social
Democratic Party, which has begun of late to change from a party
with an h ibirually negative policy to one with a more than usually
assertive policy

Wc hdie only mentioned, above, the chief obstacles It
IS enough however, to show why financial affairs have become
HO gte it i ditficulty In Pmssia a fortunate surplus has appeared
,to meet the deficit, aiising from the profits ot the State
Hallways {<J Economic Jouinal, ]907, “Go’wnment and
lublic 1 inance ”) In the Empire the deficit has been met by
the giowth ol hijulities, which now stand at £250,000, 000
Tins would have been still greater if the Empire had not made
a kind ot loitunate speculation, which no one had expectea to
justify on fisc i) grounds, namely, through the corn tariff It turned
out , indec d to ht little less than a great fiscal specul .tion, although
It was only introduced and carried out for the protection of
agricultuie against the competition of the world market

eleclTIv’'"'"' ^ Parliament

^ unn^sal suffi ige, has plainly reached the point where

a pause must<e made m the increase of indirect ^^axaton Jn

hat a beginning vas msde to meet In penal finance thrZh
taxes that chiefly tail on the propertied cUsses, namely mherS
nee duties, whxch, however, leave the n^xt-of-kin free Taxes

(Stuttgart, 191 s . published before the New BiU Related Matters **

191S] IS TOOII, I,Sain,ATIOI. J89

on the Eirohanges, inadequate attopts partially to burden
mobile mpiifA, had preceded these liws.

The Bfll, which Prince Biiiow laid before the Reichstag in
i908 (in continuation of the policy taken up in 1906), attempted
to tax the whole of inheritances through an estate duty. After
a heated parliamentary struggle it was thrown out in the
Reichstag, and Biilo’^ was forced to resign.

The majority of the Reichstag (Conservatives and Clericals)
who supported Billow iil 1909 felt fhemselves competed to offer
some compensation for the rejected estate duty. At the close of
a wearisome session, a few weeks after BiilowVresignation, the
well-known scheme* for taxation of unearned increment was,
among other things, decided on. For the two years following
this remained law, but was to disappear again after a short
trial. Among the other new taxes of 1909 there was a stamp
duty on cheques, which, howver, was soon repealed in 1913,
since it had oj^ly proved a check on the effective circulation of
cheques, too little developed in Germany as it is.

II.

The problem of the further development of death duties
retnains to be solved. They really embody a demand for equality
in the distribution of taxation rather than an important additioij
to the imperial revenue. This latter problem was, nevertheless, a
far larger one in every way. The chief work of the session 1912-13
lay in its solution. It was understood that a means must be found
to put an end to the increase of the Imperial Debt. For some
years promises had been given in the Reichstag, as well as on
the part of the representatives of the Imperial Government, that
in the future no more debts should be contracted unless for
productive purposes. It happens, however, that the Empire has
little occasion to contract this kind of debt (such as the Prussian
State has contracted by the purchase of the railways), so that the
promise means that on no account must further imperial indebted-
ness be incurred, i.e., that all expenditure should be covered by
taxation ; and that for each important new piece of expenditure,
new taxation should be imposed or oW taxes increased.

• Hitherto the following had been a favourite means for solving
this problem. It is possible to distinguish between ordinary and
extraordinary expenditure, corresponding to ordinary and extra-
ordinary demands. The increase of the army and navy was an
extraordinary exfJenditure compared to the yearly recurring needs

540

THK BOONOMIO JOtTBNAL

[KHO.

foi tne payment and clothing of the troops and such like require-
ments, these being reckoned among the ordinary demands. To
meet the ordinary annual demands by incmring fiabilitjss is
really imiwasible in an ordinary Budget. A State which does
this and incurs a debt for such a purpose, is drying up the sources
of credit. It is more allowable to borrow for a so-called extra-
ordinary or occamonal purpose. This has been the case hitherto
in the German Imperial Budget, and also m the other Budgets
of the Federated States. It is obvious, hewever, on closer inspec-
tion that the dift'crence i« only superficial. In reality the expendi-
ture is not extnwnrclmary, and still less non-recurring. It recurs
nearly every year, only not always to quite the same extent. Look-
ing back over the last ten years we have .an easy standpoint from
\i'hich to average the yearly returns, and at the same time to
^ allow tor an increase when the progressive rate of expenditure is
taken into consideration. ^

Tt happens, in aifdition, that the growing burden of indebted-
‘ ness leaves behind a deposit of recurring expenditifre through the
increasing burden of payment of interest. The German Empire
has an annually recurring expenditine of this kind amounting now
to 110,000 ,000, from which its Budget would be free if it had
incurred no liabilities. ,

On the other hand, the new plan to stop incun-ing liabilities
is rather ideal, and it is doubt lul ■whether it would b'^ possible to
carry out such an admirable system. Already for some time past
similar intentions have been expressed, and fresh indebted-
ness nevertheless hjis always been incurred. Moreover, from
what source are the new^ taxes to be drawn if the scheme is to bo
possible Hitherto it has been difficult enough to increase t’'c
returns of ta.xes m order to cover merely the increasing ordinarv
expenditure, which, apart from the extraordinaiy expenditure
was absolutely necessary. ‘It was only through the extraordinary
m^sures w'hich made last ^ear notable, in that even so substantial
a result as this was brought about. It is true, moreover, that for
an unusually great ami peculiar end, it is worth while to negotiate

The occasion presented itself at the beginning of 191'}

IZe I neTbilf d

ouL An extra demand for ^50 000 non

permanent demand for £10.000,000, was involved ’a large

1913} aBBMAN BXFBffinfBNXS IH VIBOAXi IiBOISMIION 341

♦

majority of the Beichatag waa immediately ready to concede the
incimse in the army. Not quite so quickly, however easy com-
]^rfi|J;ively/ could a majority be found to pass the necessary
' taxation to meet these demands. It is worth noting that it was
easier to find the sum of d650,000,000 for the extraordinary demand
than the sum of £10,000,000 for the permanent demand.

Hitherto, when such cases have arisen, the most unusual of
the demands has been used as an excuse for incurring liabilities.
But this time its unusual, non-recurring character was valuable as
an excuse for the requisition of a property tax, which has been
given officially the curious title of “ defence i^contribution ” ; —
curious in that it •uses the incorrect name of “contribution,^
evading the correct title of tax. It is not desired to' call the
property tax by its right name so long as an important part pf
the Eeichstag, and especially the administrators of the separate
States, want to lay hold of tl^e property tax for the^ financial de-'
mands of the individual States. It is worthy of refnark than an
incorrect nam5, and in particular the “occasional” nature of this*
tax, should be enough to allow the imposition of an enormous
property ^ax tor ihe purpose of imperial finance.

One feature of this new imperial tax was specially noteworthy.
It was the complement, which the. imperial Budget had hitherto
ajjnost excluded, to indirect taxation. It was a comple-
ment intended to touch the propertied classes, and also tp
reach the ranks of the middle class and small occupiers. The
proposal of the Imperial Government w^as to raise half per cent,
(on a uniform scale) on all property amounting to the sum of
£600 and upwards. But it was not possible to have nothing more
than a property tax in the strictest sense, since justice forbids
that large personal incomes which are not derived from property
should be free from the tax, while such small sums as £500 are tax-
able. For that reason personal incomefe of £2,500 and over were to
be burdened with a 2 per cent, tax, except in so far as an equal or
higher sum has already been taken from the property. A uniform
treatment in the^Bill of personal incomes covering a wide range
(those below £2,600) is avoided by the BVA on the same
grounds as those on which a progressive scale for the property
tax is avoided, namely, in the interests of the simplification
of taxation and its assessment.

The Eeichstag Cfemmigsion has radically altered the Bill in
both 'respects. The progressive scale advances in a continuous
grade by uniform steps, and has been brought down to personal
incomes of £26(1. Thus, the new tax has in truth become an

642

THB BOONOMIO JOtTBNAIi

tPBO.

incoiue and property tax in the form in which thft Reichstag
passed it on the 30th June, and to which the Imperial Gover^
ment gave its consent. The original plan of the scheme w§s to
raise the tax in two contributions (1914, 1915), for which the
Reichstag has substituted three (1914, 1916, 1916).

The property tax begins on property of ^500. But the
total income from all sources amounts to less than £ 200 ^ property
up to ±1,500 remains free from the tax ; and with a total income
of less than ^100, pror>erty up^to ±2,500 4s free.

The amount of the property tax is 015 per cent, for the first
±2,500 on each ^properly (the larger porperties as well), and

thereafter on the following scale

•

2,500

0*35 per ce

5,000

0-30 ,,

15,000

0-70

25,000

0*85

6o,ooa

1-10

160,000

1*30 „

250,000

1*40 „

for higher sums

160

In the same way, personal income is subject to progresbive taxa-
tion. At the bottom of the scale, on incomes between ±250 to
±500, 1 per cent, is im})oscd,.with progressive steps up to 8 per
cent, on incomes of ±25,000 and over. In the case of an ii^coipo
part of which is drawn from property, 5 per cent, of the taxable
property is deducted from the total income, and the rest is
the taxable income. Accorduig to this, a property of

£1,000 pays a tax ol £9

£225,000 £2,530

£1,600,000 „ „ .. .. £22,850

In the ('Janton of Zurich the properly tax amounts to

4^ per millc for the State

^ for local taxation (on an average)

I.C., 13 per mille yearly* without, however, being subject to
progression, not as an extraordinary tax, but as regularly recurring
taxation year after year. But what is chiefly t^o be remarked of
the assessment ITS the extent to which it has changed smoe the
time that Adam Smith (on the authority of a French official work)
praised it in respect of the height it reaches to, and in the
laxity of the forms of collection, which have very feeble force iif
meeting the opposition against so high a *tax. In Zurich the
general belief is that on the average only half of the actual pro-
property is assessed, which means one-sixth of the property income
(16| per cent.). *

1013] OBBMAK BXPBBIHBKTS IB FtSCAli tBGISLATlOK 543

1?be existing property tax m the separate German States is
stilt moonsjiderable. In Prussia half per mille (Act of 1893)
is aHowefl to the State, but not for local taxation. All the
more thoroughly, therefore, is the income tax developed for §tate
and municipality so as to .include all kinds of income, while the
property tax represents a supplementary burden corresponding to
the greater taxable cg»pacity of incomes from property. The income
ta;;c to-day amounts roughly to 10 per cent., an average allowing
for great differences in the amount, of the communal Supplement.
The Imperial income tax of 1913 does not, therefore, find so much
new scope as in the property tax ; or, in othei words, it is the
imperial tax which is resulting in an energetic administration for
the first time of the additional charge on incomes from property,
while the undifferentiated universal income tax is already a bj^avy
burden for States and municipalities.

The existing regulations fer the administration of taxation in
the separate ^^tates are to be used to carry through'^ this new law.

It is a novelty to employ these regulations for the purpose of an
imperial tax. What is accomplished during the next few years
will teacn us the result of this great experiment.

The financial measures which in the Keichstag are emphasised
as “occasional*’ or “extraordinary^* should be looked at in more
than* one way : First, from the standpoint of the success of the
new experiment; second, and equally important in the event of
a favourable result, how the future development of imperial
finance will be affected. While, in the future, no further imperial
liabilities are to be incurred, on the other hand, the new
imperial tax is only to be levied once. What further financial
expedieiift is there to be used for extraordinary purposes? In .
the future will the problem of indebtedness be really overcome ?

IV. \

However that experiment turns out, the content of the new
measure lies in a region accepted by modem science and
legislation on taxation and finance. It is^^ otherwise with
the second measure, passed on the same day, which is directed
towards meeting the remaining imperial expenditure. This is
experimental, owing to the peculiar nature of its object. No^
authorities on legistetion .and finance have had up till now any-
thing to say on the matter. It goes beyond the idea of the taxation
of nneamed increment through a mixture of confused doctrine
with the oppcJrtumsm and compromises which the complex

S44

THE ECONOMIC JOUENAE

[dec.

political situation made necessary. In all probabiitty it will
prevail for no more than a few years, and will be abai^cibned after
some experience of its working, as in the case of the la^ of 1911.

It Tvould have been convenient to take up the duty on
inheritances which had been laid on one side for years, and
to meet thereby the debt incurred in 1909. But there
were difficulties in the way, which recalled that year and
its failures. The imposition of death duties was left ^in
the^hands of the Empire by .the law of 1906, after these taxes
had been taken out of the hands of the separate States. But the
difficulties remained almost the same, because the opposition of
1909, nyimely, the Conservatives, and, in some degree, the
Clericals, continued to oppose the extension of the tax to the next
o^kin.

, The property tax again, which hid itself as an extraordinary
tax under theijncorrept title of WclwstcueT, would not be accepted
as an ordinary imperial tax, partly because the ^parate States
wish to reserve it for their own financial needs, and partly because
the Prussian Landtag elected on the basis of the Census offers a
bettor protection for the propertied classes against the property
tax than can be found in the Reichstag, which depends on uni-
versal suffrage. In their antipathy towards this tax, also, the
same two parties are found united. • «

* hrom this negative state of affairs the curious position ari>:es
that there is no lax on inheritances or property, but that from each
a tax is collected, and accepted under the name of property incre-
ment tax. It is to this creation of party compromise that the Im-
perial Government gave its consent. It is an example of the kind of
• legislation it is driven to attempt owing to the difficulties arising
out of the motley character of the parties, and because the plain
and undoubted truth must be put out of the way. It is an experi-
ment which will probably ;)rove itself unsuitable in a few years
and at the best will turn into an ordinary inheritance duty. It
will not hit property or inheritance in the usual manner, but
through the medium of an increase in property during pn sclibed
Tee?: timA At the moment this LoLt

been achieved, that the Clerical party has been won over in ita

Ihe content of the law is as follows*:

bv touches the increment shown

periods ^^Thf r property increase at different

penods. The entire movable and immovable property after dedne-

191SJ aEBKAiir EXi>BBniEHa*s in bisoaii bboislaxion 54S

tion of liabiUties is reckoned as property for the purposes of the
tax. The increment must be reckoned on each occasion over
periods of^three years i the first falling due on the 31st December,
1916. The property of individual owners under ;01,OOO remains
free from the tax. Increment under £500 is also untaxed. On
property between £1,000 and £1,600 the increment will only be
taxed in so far as it exceeds the tax-free limit of £1,000. The
tax introduces a double progression, namely, for the amount of
the income, and the amount of the ^increment. ^ •

Increments of from £500 to £2,500 are taxed at 0*75 per cent.,
and the scale then gradually ascends, increasing by a maximum
leap of per cent, fin increments exceeding £50,000. Next, the
second scale, which is determined by the amount of property;^ fits
in. The above tax scale rises upw^ards from 0*1 per cent, on pro-
perties of from £5,000 to £10,000 (the lowest step), to 1 per cent,
on property over £500,000 (th® highest step).

Property obtained by inheritance will also be treated as incre-
ment, including direct inheritance by children. Only the inherit-
ance of a surviving husband or wife remains untaxed.

These are, uriefly, the most important points of the new law.
The inheritance duty is therein extended, as we have seen, to
the inheritances of children. For the first time a law has been
passed for the whole German Empire, which hitherto had only
been law for isolated minor States (Hanseatic towns, Alsace#
Lorraine). In the Empire (1908-9) only a useless endeavour had
been made by the imperial authorities, and in Prussia (1890)
the Government’s attempts had been rejected by the parlia-
ment. Now at least we have in virtue of the new ex-
periments a tax on the inheritances of children — though on
a very small scale. In the case when the inheritor is a
minor, and the property does not exceed £2,500, the tax is
reduced by 5 per cent, for every year \)y which he falls short of
twenty-one years of age, up to 50 per cent.

The property increment tax might have found justification
if the* normal and long well-understood property tax had
already reached its full development in the indi ’dual German
States. That would have justified the Empire in not making
further use of the same measure, add in putting in its place
this new experiment. This, however, is not the case. The pro-
perty tax in the individual States has existed hitherto only in
embryo — in Prussia half per mille. In spite of this beginning there
remains a very large taxable capacity in property, and especially,
perhaps, in the largest properties, the increase of which is not

646

THE BOONOMIO lOtTJlKAli

D&iio. 191$]

affected by the burden of the tax. The increase ia pwijperty would
also be reached through the property tax, while such a tajc would
touch the whole property one year with another, whether it has
increased or not. The person with a large income pays mo?e tax
than the person with a smaller income. But it is nonsense when,
from the point of view of the property increment tax it is laid
down: that if two people, each possessing property of £6,000,
the one for a year, the other since birth, it iS in such a way liable
toi)aympnt that only the person who has had the property ‘for
one year can he taxed , and the other because he has had it from
birth goes tax fjee. The millionaire who consumes his interest
every year will be free from the tax ; but the owner of £1,000
will^e taxed when he has saved £500 in three years. '

• It is necessary to realise all the difficulties attendant on the
natuie of the parties in the German Reichstag, in order to under-
stand how this curious experiment has been brought about. It
is, in fact, the contrary of what the name of the tax clearly
suggests. For the taxation of unearned increment plainly ought to
tax the ownership of ground rent and house property on account
of the monopolistic tendency of this constantly to increase in
value in the course of time, independently of action on the part
of the owners. The apparently novel result follows on the proposal
to tax the increment in value of all kinds of property, that unearned *
increment will not be specially burdened. As to the sc urce— whether
earned or unearned-nothing is asked. For this tux it ia, in fact,
quite a different distinction that has to be decided, namely the
question whether an increase in value has arisen or not in the
course of a short period of three years. This fact is the criteron
Benfe a large property remains free if it has not increased in
value during the last three years. Therefore it is for the old landed
proprietors rather a freeing from taxation than an imposition.
Ihis IS, at all events, the case when the method of valuation is
such that it IS impossible to follow movements in the market price

However, in spite of this tendency of the new tax, the Con-
servative party m the Reichstag, in spile of its agrarian character,
has not allojyed itself to give a verdict m favour of the

not wilh remained in opposition, because it did'

not Wish that cither a property tax, even in so topsy-turvy a form

or an inheritance duty for lineal heirs, should pertain to tie

th. S “““ ““ “•> “

The rest time will show.

UNiTBKsm OF GoirnroBs. Q-USTAV COHN.

ENGLISH TOWN DEVELOPMENT IN THE
NINETEENTH CENTURY.^

In the course of the last century the main social problem
changed from a rurS,! problem to a town problem. This was
certainly true of the Poor Law. The problem of the 1834 Com-
missioners was the rehabilitation of the rural labour. That wa;?
successfully tackled, but meanwhile another problem was Leing
developed — how to build up tpwn life on a sound, basis. The
recent Poor Law Commissioners in the Majority Report tell a
story of pauperism steadily diminishing from 1834 onwards, both
in town ^nd country, until nearly the close of the century, when
there appv^ars an increase in adult pauperism, both male and
female, in London and the urban areas. This is attributed. to
, “moral causes,” or “inducements to excess of some kind ” to be
foifind- in industrial towns, “especially among the unskilled
classes.” They consider that great self-restraint and steadfastness
is necessary to an industrial life in the large centres of popula-
tion, and they express the hope that these qualities may be
acquired by a larger number of the unskilled class, as they have
been acquired by the greater part of those engaged in industry.
Before the Poor Law Report appeared, the present writer^ had,
in a study of ^ three Birmingham Relief Funds stretching over
a period of twenty years, noticed a double tendency in the indus-
trial life of Birmingham — on the one hand, a marked increase of
providence and independence amongst the skilled artisans and
respectable workmen generally; while, on the other hand, many
unskiRed laboureys and the less respectable workmen, whether
skilled or unskilled , appeared less provident and l^ss independent
than twenty years previously. The question that has presented
itself is this : Is there anything in the history of the development
of town life which would lead us to expect this dual movement—.,
amongst one section of 'Jie working classes a’^^lclearly defined
material and spiritual progress— amongst another section stagna-

^ A before Section F of the British Association, 1913.

* EoofiFOHio Journal, Pecember, 1905.

No. 92. — vox.. XXIII.

p p

648

THE ECONOMIC JOURNAL

[dec.

tion and possibly active degeneration? This lack of homogeneity
amongst the working classes appears to be of recent growth. An
acute observer like Arnold Toynbee treats working-dlass progress
as one and undivided, and writing, as he did, in 1880, was most
probably right. If we go back a hundred years we find deplorable
conditions in our great industrial towns, but conditions which were
largely common to all classes. For instance, smallpox and typhus
claimed their victims in all ranks, and a bathroom was an un-
known lu^iury in any house. Business and professional men lived
in ihc centre of the town,* and had to go through the poorer
quarters to go into the country, so that in a growing town the
middle-clnss district was at a giwing disadvantage. The middle
classes inet this by migrating to a west end. The physical separa- *
tion of I lie middle class from the working class had come about
fielore Arnold loyiibee’s time, and he was the pioneer of a
counter movement which produced “settlements.’^ What this
paper is climfly com^erned with is a much later class separation,
which lias received much less attention, namely, a separation
betw^een the iippcu- and lower sections of the working classes them-
selvi's. Though this separation is quite recent it cannot be ex-
plained without a consideration of the circumstances in which
our modern towns developed^

l^ie airunml ol inibimaiion which might be got togethei^on
modern lown-lile is prodigious, hut only a ft^w s’mplcs c'an be
*taken. ^Fo a considerable extent attention musl be confined to
sanitaiy conditions, though deiinite inloi iiiation is available and
will be utilised as to one aspect of the moral conditions of town life.
Fxperienee shov\s, •too, that jiliysieal and moral degeiieia’ ion
exist sid(' by side, so that death-rates may he legarded an
inde^ to moral as well as jihysical conditions.

At tire beginning of the nineteenth century sanitation v^as,
in general, medueval. Lqt us assume that for small towms this
meant no very gra\e danf^er, but that there wwud be a decided
detriment to health in a tuwm of 50,000 inhabitants, and that in
a towm ol ‘iOO, ()(){) inhabitants (covering probably the urea ol a
circle with a two-mile di<imeter) the risk to hejflth w mid be very
grave. At thUftime London had practically a million inhabitants, '
Jjiveipool 78,000, IManciiesjer 70,000, Bristol and Clifton 67,000,
Birmingham 01,000, Sheffield and Leeds very little over 30,000,
and Leicester jpnly 17,000. These mediaeyal arrangements had
in certain to\vns keen sligiitly modifie3 by rrivotc Acts of Parlia-
ment conferring some very eleiirentary powers for sanitatiqu and
police on Fj^eeially appointed commissioners, tit is not to be

1913] TOWN DEVBLOTMBNT IN THE NINETEENTH CENTXJBY 549

assumed that these powers were either widely or efficiently exer-
cised. For instance, in 1838, immediately before Birmingham
was iiicorjtorated, it had nineteen constables ; a number raised on
incorporation to 336. In 1848 the surveyor for Duddeston and
Nicholls had a salary of i:30 per annum, and was apparently not
certain whether the contents of drains would run up or down a
slope. ^

For the sanitary condition of provincikl towns at the begin-
ning of the nineteenth century the only source of reliable
information is these Private Acts. It is no use searching the town
chronicles, as their authors do not seem to hav>e thought about
the matter at all. Bristol had obtained Acts of Prrliament in
the reigns of William III., George JI., and George III., regulat-
ing the navigation of its river, providing for the cleansing of
footpaths, establishing a night watch, Ac., and at the date men-
tioned was under an Act of 17 ^jG. In 1806 power \vas obtained
to have street lamps, to make sewers, and to pave streets. In
1819 gas-lighting w^as introduced. The Act of 1806 gave an
unlimited rating powder for the pur]K)se of carrying out its objects,
and the rate was the same for all occupiers.

Norwich up to 1806 had only a powder to light streets, but4n
»that year obtained power to pave streets, make sewers and cess-
pools, -place lamps in the streets, have watchmen, cleanse the
surface of the streets, and deal with projecting houses. Its*
improvement rate was limited to 4s. in the on hall the annual
rent, but if the poor-rate w^is above 5s. 6d. in the £ (and the
possibility of such a poor-rate seems j.x)sitively appalling to us,
and throw’s a vivid light on the poverty of that time) then the
improvement rate w^as not to exceed 3s. in the £. Other t^wns
which obtained Acts in 1806 for lighting, w^atching, paving, and
cleansing purposes, or some of them, w'ere Lynn, Exeter, Boston,
Lichfield, and Lewes. Exeter had had^power to light its streets
as early as 1760.

Kotherham, which is, of course, a far older town than its near
neighbour, Sheffield, had, as early as 1801, obtained an Act to
.deal with its market place, and for cleansing and jighting pur-
poses, but its rating powers wrere limited to Is. in the £,

Leeds obtained its first Act in 28* Geo. 2, and obtained an-
other Act in 1790 on familiar lines, but distinguished by powers for
the provision of a water supply. In 1809 the area over which the
Commissioners had jurisdiction was enlarged, and the Commis-
sioners' were specifically empowered to have offensive middens,
&c., removed from private premises.

p p 2

550 THE ECONOMIC JOUENAIi [DEC.

, c

In the same year Sw ansea obtained a rather drastic Act for
thooe times. The removal of nuisances comprised objectionable
filth, ashes, cinders, and rubbish. New buildings' were^to be ^
perpendicular, and not overhanging, and to be set back to a
definite building line, and were not to be thatched. Slaughter-
houses were to be regulated. Kales were, however, limited to
Is. in Ihe £. ^ '

Birmingham’s earliest Act was obtained in 1769. In 1801
the Commissioners obtained a much^needed power of street-
widcming. A differential rating power was sanctioned. By a
farther Act of 1812 lamps were to be set up, spouts and gutters
were to be carried into the culverts of the toadway, and no new
buildings were to be thatched. The duty of sweeping and cleans-
ing footways was put on the inhabitants, who might, however,
compound for it. Steam engines (mirabile dictu) were to consume
their own gmoke. There were ip be watchmen and night con-
stables. Ne*w streets were to be 14 yards wide. The Commis-
sioners were empowered to purchase the markets. The rates
were fixed at 9d,, Is., and Is. 6d. in the £, according to the size
of house.

• Manchester affords a good instance of the chaotic absence of
government in a non-corpoi»ate town at this period. The parish^
of Manchester was fifty-two miles in circamlerence, had a popu-
lation of 140.000 inhabitants, and consisted of twerty-nine
separate townships. The earliest improvement Act which the
writer has been able to find is as late as 1826, and relates only to
one township (Ardwick).

From this brief review of Private Bill legislation we may get a
general idea of tlie position of English towns in the first thirty
years or so of last c^iitury as regards building and •sanitation.
The effects need not surprise us. Everywhere the diseases of
dirt still flourished, though the beginnings of sanitation brought
about some little improvement. Smallpox was, of Course, still
the jx'rmanent se.oiirge of the country, though the proportion of
deaths due to it w^as steadily falling. ]n the ^iree decades at the
end of the eighteenth century the proportion of smallpox deaths
per 1,000 deaths had been 102, 88, 92, wdiile for the first three
decades of the nineteenth century the proportion had fallen to
73, 43. 35. Our modern system of vaccination was not introduced
till 1840. Ty]>hus and gaol fever .were eIso of frequent occur-
rence. Tn spite of John Howard’s agitation the state of English
prisons was almost as bad as ever, and though Gaol Acts were
passed in 1823-4, their provisions were ^aded or ignored.

1913] TOWN DBVBLOFMBHT IN THB NINBTBBKTH CBNTOBT 651

Cholera was ao epidemic idsitor. Side by side with this was the
fact thW industry- was practically without regulation. The
Health and Morals of Apprentices Act (1802) was a very ineffec-
tive piece of legislation, and the Factory Act of 1819 only applied
to cotton mills. Elementary education was represented by a few
Lancastrian schools, and rather more National schools. Popular
amusements were*becoming somewhat less gross, and the Justices
had done a good deaf in the way of discouraging cock-fighting
and bull-baiting, and the licentiousness which acjornpanisd
pleasure fairs. The attitude of the* Justices towards the drink
traffic is most important.

Mr. Sidney Webb, in his Engh»h Local Government (The
Parish and the County, p. Sfi-'J-S), has told the story of the effort
made by the licensing justices betw-een 1787 and 1815 to controj
the drink traffic, “with results on the conduct and characte” of
the people which, as we think, every student of the period would
nowadays declare to be almost wholly good.” Tn the decades that
followed the peafce of 1815 there gradually arose an overwhelming
reaction against this licensing policy, and the dominant idea
became thrt of free trade in ale and alehouses. This brought no
legislative change till 1830, but the change when it did come w^s
so important that it makes a convejiient dividing point in our
storv— especially as from about the same date we get the stream
of legislation w^hich followed the Reform Act of 1832.

Luring this part of the century — say up to 1831— the town
population had been growing rapidly. The whole )>opulation of
the country had increased by 60 per cent., but there were not
many large towns which had not increased by at least 100 per
cent. This was ceidainly true of laverpool, Manchester, Ijeeds,
Sheffield, Birmingham, and Leicester. In Bristol the increase
was about 50 per cent., but in Clifton it was nearly 1(X) per cent.
No English provincial town had readied the 200,000 line. The
rich were still living in the centre of the towns and the poor in
the suburbs. In Birmingham the proximity of the Edgbaston
estate, ,and the decision of its owner to have it laid out solely as
a residential estate, presented an unusual opportunity for the
‘segregation of the middle classes. An inspection of several of
the old estate maps shows that in 1809 the estate was wholly
undeveloped, and that in 1825 development on the side nearest
the town had just aborted. ^ On the other hand, the main resi-'
dential street in the centre of the city, whose buildings still
remain, is named after the Battle of Waterloo, and was appar-
ently built in the- decade following that battle. Rich and poor

552

THE ECONOMIC JOUBHAL

[pec.

alike Suffered from the absence of sanitation, and it is doubtful
if there were any glaring differences in death-rates. There was
little or no sign of our modern town problems. Not* much has
come down to ns from that period, for the buildings have mostly
been pulled down to make way for the railway stations, municipal
buildings, and wide thoroughfares of the modern central area.

When we come to the next period of the' niheteenth century,
roughly from 1830 to 1870, there is a very different story to tell.
L^t us take housing ; there are said to .be from 40,000 to 50^00
back-to-back houses to-day iff Birmingham, the homes of at least
200,000 people these v’ere practically all built in this period.
Back-to-back houses are the despair of medieal officers, and recent
official' figures for certain Yorkshire towns show a mortality “
greater by 15 per cent, to 20 per cent, in them than in through
houses comparable with them in rent and character of occupants
(Cd. 5,314).

If we turn to Kcensing administration wo find that in the
centre of Birmingham — taking a mile radius wtth a population
of not less than 200,000 — tlu're was, a very few years ago, roughly
one licensed house for every two acres, or, say, every fifty families.

very large proportion of these licenses came into being in Ihis
1830 -1870 period. What is,, true in this respect of Birmingham
is true of all otir largest provincial cities. Again, since 1837*
^reliable statistics of births and deaths are available. The out-
standing fact, which these statistics show is tha, the death-rate
for the wdiole country, including the country districts, was as
high in the 1 800-1 870 period as it was from 1838 -1840. As we
go round the sluink of these big provincial cities w’e, are faced
everywhere with the evil legacies of this disastrous period of our
social history.

Ohe main mistakes of the period were its housing policy,
or, rather, the absence of any housing policy, and its licensing
policy. The hon.sing pr?)blem was, of course, one of in;mense
difficulty. The increase in the population of Bngland and Wales
between 1831 and 1851 was over four millions, and between 1851
and 1871 nearly five millions. The steady flow into the towns
had already%egun, and by 1851 half of the population of the
country was living in “urban districts.” By 1881 this bad been
raised to over two-thirds.

By 1851 the followiBg municipalities had passed the 200,000
line, viz., Live.pool with 376,000 inhabitants, Manchester 316,000
and Birmingham 233,000. With between 200,000 and 100 000
inhabitants came Leeds with 172,000 inhabitants, Bristol 137,000,

1918} TOWN DEVELOPMENT IN THE NINETEENTH CBNTUBV 553

Sheffield 135,000, and Bradford 104,000. The rate of growth of
towns between 1861 and 1871 was not less rapid than in the
preceding •twenty years. How were these crowds housed?
Everyliiing was sacrificed to cheapness, and cheapness was
attained not merely by excluding all conveniences such as the
laying on of water, but by restricting the ground space • The
system of economising space by building cottages in courts must
be an exceedingly old one, and an old city like Norwich is full
of them. The new manufacturing districts seem t) have ttie
glory of inventing an added horror by building in these courts
three-storied back-to-back houses. It is excet'dingly difficult to get
exact information as when different types of houses were built,
*but judging from the geographical }x>sition of this type of house,
both in Sheffield and Birmingham, its adoption may be pui
somewhere near 183(k Tn Birmingham the building of ^hese
houses seems to have stopped just before 1870, on ih/* passing of
a building bye-law which enacted that there must be a space
behind every ne%^ house. Their erection has recently been made
illegal by statute.

As far as water supply and drainage were concerned, these
closely-built and stuffy houses were no better off than the hou^s
in a small village. Tn 1818 an inspector visited Birmingham to
mal^e an official inquiry and noted the absence of a general system
of sewerage, the imperfect condition of streets and roads, the
confined courts, the open middens and cesspools, stagnant ditches,
and insufficient v^aier supply. It is interesting to note what
escaped his attention. We know from another source that at
this date there were pig-styes in the neighbourhood of the Town
Hall, and therefore presumably all over the town. The pig-styes
and the back-to-back houses he seems to ha^ taken foi' granted.
Drainage, water supply, and middens have been attended to, but
the back-to-back houses still n^main, and a beginning only has
been made in turning closed courts inio open terraces. Here,
therefore, we have a direct legacy from the past.

Birmingham does not afford us a very good opportunity of
showing in figures the abiding effects of this period, but, fortun-
ately, through the kindness of the Medical Officer ol Health for
Manchester, some very striking and instructive figures for Man-
chester can be given.

Manchester Township represents the^spldest and most central
of the twenty-two townships which made up Manchester Parish.
It was completely built over by the year 1851 , and its population
was then 187 Since that time it has, by a process which is

654

THE ECONOMIC JOEBNAL

[dec.

taking place in the centre of all large towns, steadily diminished
in population, so that in 1901 its population had fallen to 132,000.
The death-rate in Manchester Township has been a’s •foUo^ws :-~-

1888-1840 1841-1850 1861-1860 1891-1900

35 8 33 8 31-6 <• 29 - 6 ’

Now Manchester has in many matters of health taken the
lead, and enormous strides in general sanitation have been made
in the forty years between 1860 and 1900 ; and though, of course,
\v(» must set against this tl\e fact of the very large population
which has gathered round old Manchester, yet the fact remains
that the death-wte for 1891-1900 is only two points better than
that for IH.'ii-OO. In a more modernly-buift town like Leicester
the death-rate of the whole town in 1851 -60 was 26'2G, while in
1891 1900 it was 17'9. The reduction in Manchester Township
in forty years is about 6 per cent. , and in Leicester 30 per cent.

We ma> reinforce these figufcs with those for the whole
country. In* the jieriod 1811-. 50 the deatli-rate was 22'4, while
for the period 1891 1900 it was 18 2. Manchester Township has
therefore seriously lagged behind the general rate of improve-
ment, and is relatively a more unhealthy neighbourhood than
iWvas forty years ago. Very probably this is true of the central
areas of all our very large provincial cities, w'here these cenirrh
areas were covered with small houses prior to 1870. . «

Now let us turn to licensing adiiiinistration. The feeling
against the restrictive policy of the Tiistices to vvhieh reference
has already been made resulted in the legislature passing an
Act in 1830 iind(‘r j,vhich ftc ■ trade in beer (not wine or spirits)
w’as established. Any householder on executing a bond nriil
payjpg a licence duty ol £2 2s. was entitled to retail beer and
eider on or olT his pi’cmises without a .lustice’s licence. The
result of the Act was an enonnous increase in the consumption of
beer, and no diminuiion m that of spirits. A.t once 30,f»(X) beer-
houses sprang info existence. In spite of somewhat more
stringent regulations these continued to increase, till in 1869 they
numbered nearly ,50,000. At the same time, the fuHy-Ueensed
houses, whi^h in 1828 numbered 50,000, had by i272 reached
70,000. The boerhou.scs with an on-licence w'ere brought under
the Justices’ discretion in ^869, but the then existing beerhouses
. (since known as ante 1869 beerhouses; were put in a favourbd
position by lu-ovjsions wfcich preventQd the«Ju6lices from refusing
a renewal of an ante 1869 beerhouse unless the house haid been
misconducted or for other similar reasons. Up ta tliis year- (1869)
our big cities were dooded with beerhouses. Wejihave it oB the

1918] TOWN DNVBIiOPIifENT IN THE NINETEENTH CENTURY 555

•

authority of the inspectot to whose report reference has already
been made that in Birmingham in 1848 there were 1 ,363 public-
hons^. This gives one to every 166 inhabitants, or every thirty-
three families. Until the passing of Mr. Balfour’s Act in 1903
very little was done to get rid of these ante 1869 beerhouses, and
most of them survive to-day. A few years ago the writer went
into this question in some detail as regards Birmingham, and the
following figures wifl give some idea of how this state of affairs
has survived in the older wards : —

St. Mary’s had one publichouse to every 177 inhabitants.

St. George’s one to every 239

St. Bartholomew’s one to every 27e5

St. Thomas one to every 287

St. Martin’s one to every 285

Deritend one to every 31(5

While Saltley^an entirely working-class suburb, v\hich has for
the mo^t part been built since 1870, has only one publichouse to
every 1,622 inhabitants. The excessive number of publichouses
in the older parts of our large cities is therefore another direct
legacy of this 1830-1870 period. •

. \V.e must not assume that during this period nothing was being
done to promote the healthy development of our big cities. The
period of improvement by Private Act of Parliament lasted till
about the ’fifties, and was much facilitated by a seri(»s of general
Acts, most of them passed in 1846-1818, which were based on the
experience gained by the experiments in tne big cities. These
general Acts were not compulsory, but could be adopted in whole
or in part. *

The more important were the Town Improvement Clauses
Act, 1847 ; the Markets and Fairs Clauses Act; the Town Police
Clauses Act, 1847 ; the Public Baths and Washhouses Act, 1846;
and the Public Health Act, 1818.

Further efforts at general sanitary legislation were made in
the Nuisances Removal Acts of 1853, 1863, and 1866, and in
Sanitary Acts of 1866, 1868, and 1870, but the first compulsory
Acts covering the whole country were the Public Health Acts of
1872 and 1875, the latter of which is still in force. This 1830-
1870 period was not ’’dthoijt efforts to improve town life generally,
and during its latter half the first public parks and libraries were
opened. It is from the passing of the Acts of 1872 and 1876 that
a new chaptflfjr of town life in England begins.

656 THE ECONOMIC JOURNAL [dBO.

•

The general impiession made upon the wri er is that of the
manufacture of enormous quantities of new wine, and the pouring
of it into bottles for the most part entirely old. Sincfi 1875 most
of the new wine has gone into new bottles, with much more
satisfactory results. The Eeform Act of 1867, the Licensing Acts
of 1870 and 1872, the Education Act of 1870, and the Public
Health Acts of 1872 and 1875, and the Factory Acts which were
consolidated in 1878, constitute a very remarSable group of enact-
meqts, and. have undoubtedly provided ^ means of social saHa-
tion for the newer parts of our great industrial centres. No
really new departire w'as initiated during the succeeding
generation, and we mu.st not let such Acts as Mr. Balfour’s
Licensing Act, the Workmen’s Compensation Act, the Town
Planning Act, and the National Insurance Act, which give a
distinction to our own immediate times, blind us to the enormous
importance of these earlier steps.

Before we, proceed to examine* briefly the very satisfactory
'results of the legislation of the 1870 decade — at least in
those districts where there has been sufficient public spirit to
take advantage of it — let us notice its comparative, oven its almost
absolute, failure in dealing with accomplished facts. It appejirs
that in the very large industrial centres, and to a smaller extent
in most industrial centres, a considerable proportion of the popu-
lation is living under physical and moral conditions which are
almost as bad as those which obtained fifty years ago, and that
falling death-rates, and evidences of moral and educational pro-
gress, are quite compatible with this stationary condition of the
old centres. The pfoblem of dealing wilh these central slums
has become more difficult with Ihe lapse of time, and any solution
vastly* more expensive; but i(. is crying Peace where th.ere .s no
Peace il the social legislation of last century is pronounced a
success, when it has only been a very partial success. Here we
get the basis of the cleava|;e in the ranks of the working classes.
That basis is something more than a difference between skilled
and unskilled. It is true that the tinskilled labourer wants a
cheaper house, and therefore gravitates to the old cerfres but a
large number^ of skilled artisans, and this is especially f’rue in
Birmingham, live in the central districts and conform to the
central type. In spite of larger earnings, the families are bronghh
up on a meagre housekeeping allowance, aryl exposed to all the
oweiing influenfes, physical and moraf, of these central districts.
The comparative cheapness of the houses, their, proximity to
works and goods yards, and to publichouses and, picture palaces.

1913] TOWN BBVBLOMIBHT IN THE NIKBTBENTH CBNTXJBY 567

make them veritable trapis for the easy-going and a boon to the
vicious. . ,

For the general improvement in sanitation which began in
*1876 ^reference can be made to Chart I. in the Blue Book on
“Public Health and Social Conditions'' (Cd. 4,071, published in
1909).

It is perhaps more instructive, and certainly more interesting,
to leave general statistics and to come to concrete examples. An
attempt will be made to measure the success of this scjpial
..legislation in three different places, typical of three sets of
conditions.

Birmingham will* serve as the first instance. Here we have a
large town full, prior to 1875, of the gravest deficiencies, but
with public-spirited citizens anxious to make the best of the
chances given them, by the legislation then just passed, and
taking full advantage of it in its new industrial suburbs. As a
result the contrast between tlfe old centre and the*new suburbs
is very grave.* Leicester represents another story. Here the
burden of the past was much less heavy, and as the problem was
attacked with much spirit, we find that remarkable success has
been attained even in the older districts. Finally, w^e may take
Middlesbrough, which is much the newest-built of the tfiree
towns, but which, for reasons which are easy fo understand, has
failed to develop on healthy lines.

To begin with Birmingham. In 1901 its population was
522.000, and 140,000 people were living in wards wdth a death-
rate over 20 per 1,000 ; nearly half of this 140,000 were in w^ards
with a death-rate of over 24 per 1,000. In 1912, the figures for
which have just been published, St. Mary’s Ward of the enlarged
city, with 32,000 inhabitants, had a death-rate of 26*0 ; Duddeston
and Nechells (41,000) of 22*0; and St. Bartholomew’s (37,000)
of 20*2.

To contrast with this, in 1901 the newer districts of Saltiey,
Balsall Heath, and Bordesley — all working-class suburbs — had a
population of 135,000 and a death-rate under 15. In 1912 the
death-rate had fahen to about 13. Districts still further out, and
not then within the city, such as King’s Norton and Erdington,
had a death-rate under 10. For the t{?n years 1895-1904 w^e find,
taking twenty of the largest towns in England, that the worst
positions are taken by Liverpool, Manchester, Salford, New-
castle, Sunderland, Oldham, and Birmingham; so that Birming-
ham, though typical of these old industrial centres, is by no means
the worst of its type.

658 THB BOOKOMIO JOtnUSAL

If Space permitted, an equally striking contrast to.in^depend-
ence and moral standing could be shown betw^n the central
core, and the working-class suburbs in Birminghato^ In the
latter there would be seen elementary schools of the .best type,
with good playgrounds and well-fed scholars. Of these scholars
a much greater proportion would be found passing into the
secondary schools with which Bumingham is so* well provided.
We should find well -patronised free libraries and swimming
baths. The churches and chapels would be seen working with a
success altogether beyond what attends efforts equally strenuous
in less fortunate neighbourhoods. The life of these working-
class suburbs is o^en to many criticisms, as, indeed, is the average
mode of* life in suburbs in general, but in its broad outlines it
attains a reasonable standard of physical, intellectual, and moral
well-being. This is not true of the central districts.

N^ow lot us turn to Leicester. At the beginning of last century
Leicester had*Jhe mcrdest populatio^n of 17,000 ; but increasing its
population by aboitt one-third in each decade, iif forty years it
had trebled its population, and in 1841 it was a town of just
over 50,000 inhabitants. By 1871 it had nearly doubled its
poijulation again, and must have passed the 100,000 line about
1873 or 1871, when the new, legislation was beginning to make
its influence felt. By 1901 its population had once more doubled,
the figures for that date being 212,000.

In merit as a healthy large town Leicester is siniost uniformly
second in a list of thirty-seven towns, and the one place which
boats it is Croydon, which is more cf the nature of a .London
suburb than a self-Contained town. The only industrial town
which is in a level Avith it is Coventry, which is very much smaller.
Covefltry is, of course, a- very old town, but it is only since
1901 that it has become a modern industrial centre of real im-
portance. Cardiff and Poi;tsinouth, which are comparable to it
in size, run it fairly noar.^

Leicester did not start with a particularly good death-rate, as
during the thiidy years from 1845 to 1875 its average death-rate
was well over 25 per 1,000, and in nine of those years "vas over 27.
Since 1875 i<s death-rate has never reached 25 per l/>00, and
since 1882 it has only twwe been over 20, and the average of
the last five years is well under 14 per 1,000. Abqut 50,Q00 of
The inhabitants in the centre of the town Jive under conditions
considerably, but not alarmingly, worse than the average-. Its
two worst wards, with a population of about 25,00(1, have a gleath-
rate of just over 18 per 1,000; while tw'o othera, with about the

ISlSJ-ifOWH PEVELOrMBNT IN THE NINETEENTH OBNTTJEY 669

♦

same population, have a death-rate of 16^. All this is due to an
energetic' and enlightened administration in sanitary matters
actuig undar favotnable historical conditions. Let us take one
instance. The introduction of the water-carriage of refuse is
always a considerable expense in money, and a great saving in
life and health. In 1896 Leicester obtained compulsory powers
for converting existing arrangements, with authority to contri-
bute towards the expense. As a result, at a cost of £14,500, over
6,U00 houses were provided with the best sanitary ar-angemacts,
»and apparently in Leicester every house is now properly furnished
in this respect.

Middlesbrough, ftur last example, is an example of how oppor-
tunities may be neglected, and an easy task turned into a difficult
one. The town was not incorporated til) 1853, and its populatipn
in 1901 was only 91^000. The really old part of the town has
about 16,000 inhabitants, and the death-rate for that district for
the ten years 1901-1910 was over 28 per 1,000. The town as a
whole falls intfl two districts, east and west. ' The west, with a
population of 58,000, has a death-rate of 19*7. Part of it has been
built on a me^’sh. The east side, with a population of 34,000,
has a death-rate of over 16. Not 10 per cent, of the house^^are
properly furnished as regards the jvalcr-carriage of refuse, and
7 ner.cent. still have the most primitive arrangements.

This comparison suggests that English towns have still threg
options : (a) to leave the pre-1872 portions of the town very much
as they were at that date, while utilising legislation to the full
to make its newer suburbs healthy and moral ; (b) to spend money
freely on the older districts as well as to buiid the newer districts
on sound lines; and (c) to do the minimum, and it is not a very
high one, allowed by the law in both old and new countAes.

It would be interesting to discuss how far a case is made out
for special legislation for the prc-ia72 districts, dealing either
with sanitation or licensing or both. Part 1. of the Housing Act
of 1890 was no doubt intended to apply to these districts, but its
application is optional, and the option is now seldom exercised.
The excessive sickness section of the Insurance Act may possibly
be used as an inducement to improve conditions."" As regards
temptations to drink, Mr. Balfour’s Act is being used to diminish
these in the central districts, but progress is painfully slow.

A further question is wjiether the time has* not come to make
the standard of sanitary administration observed by the best
municipalities compulsory on all urban areas. There is a con-
siderable risk that the mistakes of Middlesbrough may be

560

THE ECONOMIC JOtTBNAL

[DEft, 1913

repeated. During the decade 1901-1911 the growth of urban
population showed decided signs of shifting. The greatest rates
of increase were in the fifty towns having a populaficfia between^
30,000 and 40,000, and next came the thirty-seven towns having
a population between 50,000 and 75,000. It is in* towns of this
size that the temptation comes most strongly to repeat the
mistakes of Middlesbrough.

P. Tillyabd

REVIEWS

Indian Currency and Finance. By John MiYNArd K.j^j’nes,
Fellow of King’s College, Cambridge. (London : Macmillan
and Co. 1913. Pp. 263.)

The purpose of this work is to give a critical exposition the
Indian currency and banking system. The time of it^ appearance
may have been determined by the very energetic but ill-considered
attack on the IiMian monetary administration made last autumn,
but the phrasing of some passages rather suggests that they were
originally written^ a memorandum or report for official use. In
any case, tfte book is clearly the re, suit of prolonged and detailed
study by one who has had access to the best sources of informa-
*tiou.

Mr. Keynes has undertaken a task of no ordinary difficulty.
What he says in speaking of the Indian reserves is applicable to
the whole Indian system : — “The outcome 2 Jartly of historical
origins, it has no logical basis, is exceedingly difficult to under-
stand, and has often led in consequence to a good deal of mis-
understanding ’’ (p. 172); and again, “the objects to be attained
are simple, but the methods of the Government are, largely for
historical reasons, exceedingly complicated ’’ (p. 124). It may
be said at once that Mr. Keynes has unravelled the complication
with perfect mastery ; that he has given a thoroughly lucid account
of the whole question, or rather series of questions, at issue : and
that whether or not his judgments on these questions are accepted,
as 1 think they must be, the book itself is, and is liliely long to
remain, the standard work on its subject. It is, so far’as I know,
the first complete account of the Indiun banking and currency
system which has yet appeared ; it contrives, while explaining all
the important details of the gystem, to make its essential factors
and principles stand out in clear relief ; the handling throughout
shows remarkahle ability, and the style is beyond praise.

The exposition i is so thoroughly logical and consecutive that

662 THE ECONOMIC JOUBNAL [DEC,

the critic cannot do better than follow the author’s order in
dealing with the various topics treated.

In chapter i. Mr. Keynes gives a very terse sketch of the
existing currency position in India, including a useful lisf Of th^f
legislative or administrative Acts, never systematically set forth
by authority, on which the system rests. It leaves the present
position perlectiy clear. But incidentally, in explainibg how the
present position came about, Mr. Keynes ‘is led to refer to the
“broad historical facts.” On these [le says that he does 'hot
intend to spend time ; but h*e has allowed himself to make som^
very disputable statements*. When a book is so thoroughly sound
in il??^in contentions, it may seem ungenerous to take exception
to obiter dicta on matters lying outside its selected province ; but'
^ne or two passages seem to call tor remark. Mr. Keynes repre-
sents “the silver interests” — by which .phrase I suppose he
denotes those who lavoured the re-raonetisation of silver, though
it IS not usual to speak of their opponents as “the gold interests ”
— as holding that “a depreciating currency is aelvanlageous to a
country’s foreign trade.” This is hardly the kind of view which
a prion one would expect to be held by the in^y able Grovernors
o^the Bank of England who were active leaders in the move-
ment, or by Sir David Baijroiir, and many others w'ho might be
named. It would better rejiroscnt the misunderstanding of
, bi-metallist views common on the part of the ‘'sound cuirency ”
men who opposed them, and whose principles Mr. Ivynes else-
where rates at their iiroper value. The bi-metallist position can
be briefly stated. They conceived the tacts to be broadly that
since 1873 gold'lifid steadily appreciated, while the Indian cur-
rency down to 1888 had fairly maintained its value, slightly
de^freciating from 1888 to 1893. Their essential pririt-^ple was
that the persistent appreciation of a monetary standard was
injurious to the country ^goncerned, and should be checked; every-
thing else logically lollowed from this, though in point of fact it
was the hieak m Eastern exchange which first arrested the atten-
tion of the business world. As far as ffireign trade was con-
cerned, their position was that a country Vhos currency was
stable, lilii' India, w’ould have an advantage in dealing with a
country like England, whose currency was appreciating. Their
arguments always implied that the rupee practically maintained
Its purchasing power. If the rnpee^had ideally been depreciating,
argument would have been deprived of its main -premiss.

1 hey also held that for choice a depreciating standard is more
stimulating to national production than one, which appreciates.

1913] KBYNBS : INPIAN CUBBBNCY AND FINANCE

563

Bnt^this oonteBtion related ta the national output, and had no
special apj^lication to the movement of foreign trade. Now, their
cardinal djc+rine that a continued fall of prices is a drag on
^ogrdSs may be, and is, disputed. But when, after 1896, the
bi-metallist ai^i was realised in a quite unexpected way, by the
nearly fivefold increase in the production of gold, there were few
of their opponents who did not welcome the even excessive
reaction in the price movement. Post hoc, non propter hoc. But
bi-'L.etallists may, at any rate, congratulate themselves that the
.^ice-reaction has been accompanied by just the remarkable ex-
pansion of trade, and especially of trade with the undeveloped
and borrowing countiies, wh'ch they bad expected and pr^ licted
•in that event.

Chapter ii. deals with the gold exchange standard system. It
is one of the ablest chapters in the book, and T shall be surprised
if it does not have a marked effect on currency views in this
country. Mr. Keynes contrives in twenty-two pages to make a
survey of the ^^wld's currency systems, showing an intimate
knowledge of their really vital or pivotal features; and yet the
exposition is perfectly lucid, and the broad results stand out un-
mistakablj. There is no doubt that to the ordinary Englishman,
whose ideas on currency matters are not appreciably advaifted
•beyond those of Lord Liverpool, tlie Indian currency system
appears artificial 'and exceptional. Mr. Keynes easily shows that
the English system, or rather the English theory, is the excep-*
tion; and that the world to-day, England included, is really
working more or less on the Indian principle. What is this prin-
ciple? It is, in Mr. Keynes’s words, “the v^o of a cheap local
currency, artificially maintained at par with the international
currency or standard of value “ (p. 36). As the most usual me^thod
of maintaining parity is by selling gold exclrange on international
banking centres, this system is usually known as the gold
exchange standard.' Mr. Conant and*utlier writers speak as if
this gold exchange system were ideal; and Mr. Keynes, “speak-
ing as a theorist,” holds that “it contains one essential element
in the Ideal system of the future” (ibid.),

• But the system is, of course, exposed to two great dangers.
If the local currency is too “cheap,” it invites illicit issue; and
this, if extensive, will destroy the parity. On the other hand, if
the local currency is issued with a content- value near to its face#
or exchange value, then a Slight rise in the value of the metal
will leave the seigniorage on the coin negative, and the currency
will instantly disappear in the melting pot. This latter difficulty
No. 92,— voii. xxiil. Q Q

564

THE ECONOMIC JOT7BNAL

[me,

would, of course, not occur if the local currency were paper. * But
as things are, the Indian Government has tound illicit coinage
rampant ; while in Mexico, the Philippines, and the St]^aits Settle-
ments, a sudden rise in silver caused the disappearance of whol<^
currencies. It follows that all Governments adopting this system
on a silver currency basis must be greatly concerned in steadying
the price of silver. Yet, curiously enough, as was pointed out
by the American Commission on International Exchange, the
Indian Government, by its extremely irregular appearances in
the silver market, is the principal cause of the fluctuations in thj^^
value of that inetah The system has another serious consequence,
predi^^l by bi-jnetallists before it^ introduction into India. It
tends toVeplace silver by gold in the native hoards. Just as a^
Frenchman buys and sells small parcels of Rentes instead of open-
ing a banking account, so the Indian uses ornaments. When the
rupee contained its face value of silver, silver might be used for this
purpose. >k)w that the rupee circulates at an artificially appre-
ciated value, ^her^ would be a heavy loss on turj;iing silver orna-
ments into rupees. He therefore now uses either gold ornaments
or sovereigns ; and this is the main cause of the increased
absorption of gold by India. These are points which Mr. Keynes
have omitted for purposes of compression ; but they deserve
notice in some future edition.

The interesting sketch of the origin of the exjchange
•(p. Bl) calls for a word. Mr. Keynes finds tins origin, so far as
practice is concerned, in the method adopted during the second
half of the eighteenth century for regulating rhe exchange between
London and Edinljurgh. It was also shown, in the celebrated
Report of 1804 on Irish Exchange, that the same system was in
use in Ireland. Rut it w^as, in fact, the general system cut which
English country banking was canied on in those times. When
the country banker discounted bills for his clients, “cash” meant
either the banker’s own •botes or a draft on* his London agent;
and the draft was preferred in the larger operations, and came to
be regarded, like a credit with the Bank t^-day, as the highest
form of “cash.” We might, indeed, go back<to the Middle Age,
and find in the European national currencies, aO silver kept at»
parity wiin the gold besants of the Byzantine Empire, an anti-
cipatffSn on a larger scale of the system which appears to mai^
•as the latest novelty.

As regards the recent revival of the system, it was un-
doubtedly the example of Holland, both at home and .in Java,
which established the practice. (Why, by the way, does Mr.

1913J KBINBS : INDIAN CtTBSEBOr AND PINANOE 565

Keyaes describe the Dutch system as crude (p. 31)? The
holding of foreign bills would seem to be as effective as the
keeping of# foreign credits, especially as these bills were largely
LoSdon.) Amc^g the writers who have contributed to the
modern vogue 4)f the system, of whom Col. J. T. Smith was one
of the earliest and ablest, Mr. Lindsay deserves the place of
honour, and it is satisfactory to find him at last coming to his
own in this book. But the series of able papers written by Dr,
Van den Berg, some of them for the information of the Ind^n
^^i)vemmant, also deserve to be put o*n record ; and with the later
developments of the system, the name of Mr. Conant will always
be associated. Mr. Ifeynes c.aims for India tha" it w^as ^he^first
•country to adopt the system in its complete form. But this seems
to many persons, and especially to foreign critics, exactly whav^
the Indian Governmeni; has not done. Neither the upi>er nor the
lower limits of parity are secured by a definite systematic Act.
Fifteen rupees are obtainable *for a sovereign in 'India (and
generally in Loiidon) only “so long as a Notification of 1893 is
not withdrawn” (p. C). Mr. Keynes himself notes (p. 7) that
the Government have given no binding undertaking to sell gold
exchange at a fixed price. This is the keystone of the whole
system ; to leave it as a vague understanding is to incite distrust,
* In chapter hi. the Indian paper currency is considered. Here,
again, Mr. Keynes goes straight to the root of the matter. The
characteristic advantage of paper as contrasted with metallic
currency is that under a suitable system of issue the note may
be used to give elasticity to the circulation, and thus to prevent
stringency due to seasonal and other causes, ; pressing need in
India. Needless to say, the Fjnglish note issue is absolutely
deprived of this advantage by the Act of 1844, almost as absurd
in this respect as the United States reserve’ law. “What would
be thought,” says Mr. Keynes, “in France or Germany, or in
any other European country, if an expansion of the note issue
could not be made against the discount of home bills, but only
against a corresponditig deposit in cash, cent, per cent.? Yet
this is the position in India ” (p. 180). And in England, it may
be added, on whose unhappy model the Indian systen^has been
planned. When, in 1902, Spain was proposing to intro(iice the
English system of issue, M. Thery well said that but for our use
of chequete the system would have been impossible in England,
and that it was quite out of*the question for any other country.
Spain took M. Th^ry^s advice ; it is to be hoped that the Indian
administration wiU weigh Mr. Keynes’s suggestions. For India

Q Q 2

566

THE ECONOMIC JOTJBNAL

[DEC.

the matter is of the first importance, for there is a very marked
annual seasonal fluctuation in her discount -rate, the minimum
varying pretty regularly from about 3 per cent, in* the slack to •
8 or 9 per cent, in the busy season (c/. p. 24^. This vanation is
largely due to the cost of sending money from London to India
for short loan purposes, and therefore might be greatly reduced
if Government w'ere to fix exchange with London at Is. ?d. But
Mr. Keynes shows conclusively that there* are serious objections
to such a course, and that the naturqil remedy is to provide for
proper elasticity in the papier currency. A minor defect in tjier'
Indian currency, noticed *later (p. 95), is of importance because
it thf iocreased use of pa^er which is so much to be

desired.'' There are not adequate facilities for the exchange of
notes into coin. Thus in the Punjab, where the sovereign is
displacing the note, the difficulty of casljing the note seems to
be the principal reason. This provides another illustration of
the widely ‘observed tact that a'note issue cannot be effectively
circulated except, by an institution engaged in ordinary banking
business : one of many important arguments for a State Bank
in India.

Chapter iv. deals with the proposal for a gold currency in
India. This proposal, the special hobby of the Fowler Committee,
whose report will not rank high with monetary expc*'ts, seems
to have found favour with Lord Crewe and ihany high fhdian
officials, and is supported by many persons A\bo imagine that it
means the introduction into India oi the English system. Is
such a general use of gold as currency in India a thing lo be
desired? “My own answer to this question,” says Mr. Keynes,
“is unhesitatingly in the negative” (p. 891. Most oi us will
probably agree. He gives excellent reasons for his won. "A
gold standard is the rule now in all parts of the world ; but a
gold currency is the exception.” (How many English public men
realise the distinction, or are aw'are of the fact?) “I think 1
am right in saying that Egypt is now the only country in the
world in which actual gold coins are thef principal medium of
exchange.” The gold exchange or gold j^arit;, system, as is
obvious ,^lmits of large economies : it was mainly on this ground
thatPftordo advocated [t. Mr. Keynes finds two farther and
foremie arguments against an incrersed use of gold in India. He
shows clearly that it would tend to weaken the gold standard
reserves; and, again, it would ch'eck the development of the
paper currency, to which India must look for the elasticity of
her system. There is another capital advanjtage arising out of

667

1918 ] KBTNBS : llraUN CTTBRBNiDT AND FINANCE

• • / . V. >

the gold exchange systerh . which Mr. Keynes does not mention.
It lends itself, as ho other does,* to the ecientifia.regnle»ti<¥tt..of
|he stjiRidaiSrd’, if this is ever to be achieved, Eegulation by
seigniorage on facS-value-content coins seems to present grave
practical di&cdlties. Mr. Keynes seems to look forward to some
scientific correction of the standard of value. He observes (p.
101), ^*It is hot likely that we shall leave permanently the most
intimate adjustments of our economic organism at the mercy of
a lucky prospector, a new ‘chemical process, or a change of ideas
iii Asia.’* More than a quarter of 8 century ago, when the
present writer used very sirr^ar words, he was roundly ^Med.
^But a good deal of water has gone through the*mill sii^Se then.
Mr. Keynes’ dictum has aroused no protest, so far as I know, and
will be cordially endoised by a large body of opinion. •

The case thus raadfe out against encouraging the use of gold
currency in India seems to me exceedingly strong, and will take
a good deal of answering. Generally, too, *one would entirely
agree that convAtibility into metal, not metallic content, is the
best principle for national currencies, if we are to confine our-
selves strictly to the currency point of view. Where, however,
as in England, the constitution of the banking system, and 4he
pareless habit of the people, are sueh that it is impossible to
secure the provision of adequate banking reserves, I am inclined
to agree with those authorities who oppose the further super-
session of gold in currency, on the ground that the coin thus
used might be called in, in exchange for notes, at a time of
serious emergency, when it would prove an invaluable first line
of defence. But this consideration does not apply to the case of
India ; because, as Mr. Keynes rightly insists, it is just at such
a time of crisis that the Indian w^ould hug his gold. It may be
assumed, then, that the balance of argument, on economic
grounds, is against the increased currenpG>y of gold in India. But
there. are those who, while not concerned to deny this, hold that
political considerations make it desirable. High authorities, both
Anglo-Indian and Indian, urge that a strong preference exists for
a gold currency, and that even if this has merely a sentimental
basis it should be considered, and may justify thVsexpense
entailed. This is eminently a questioif for the CommissiSt**;. but
so' far as outsiders can form an opinion, the preference in question
is confined to a relatively small class of persons. It can hardly
be described as national, nor does there seem any sufficient reason
for humouring it in face of the very substantial disadvantages
which have been noticed.

568 THE ECONOMIC JOCBNAL {DEC.

There is even less reason for the proposal to establish a Mint
for gold coin in India, and Mr. Keynes rightly opposes it. If it
is desired to provide a market for gold, he would |)r6fer that
the Government should oblige themselves to purchase bars for
currency as the Bank of England does under llie w^^ll-kiiown
Clause 4 of Peel’s Act : an interesting and useful suggestion. His
concluding sentence is quite in Adam Snnt];i's vein : “The estab-
lishment of a Mint, however, would flatter at small expensq, an
igrtorant vanity. The Government, by granting it in response
to popular appeal (though I doubt whether, in fact, there is affy
suck^ppeal), would have a pleasaij^ feeling of being democratic
on an o^sion when to yield involves no more evil than any other,
expenditure on a piece of fairly cheap ostentation’^ (p. 87).

• The next chapter, on council bills and remittance, is a very
clear statement of a perplexing subject, 'full of pitfalls. Mr.
Keynes is specially concerned W show that it is a mistake to
suppose that* the ?5ecretary of State’s action in regard to the
amount of council* bills offered can in any important degree affect
the volume of the rupee circulation (pp. 1 09-113). He also
show^s the uncertainty as to the precise gold points of exchange in
Iniia, arising from the fact that gold may come in from Australia
or Egypt, as well as from London. The chapter corxclurles with
an interesting balance of remittance for India, and an anarlysis of
» the Indian home charges, at present about nineteen millions
sterling.

Chapter vi. (pp. on the reserves and cash balances,

is the longest and most elaborate in the book, and is full of
interest from beginning to end. In it the whole reserve position
in India is subjected to a most searching and able examination,
in whicJi account is taken of all piobable demand^^ upon the
Government, whether for gold or rupees. In the course of this
inquiry the complicalioxs of the various rd-serves are carefully
explained : there is an excellent history of the critical events of
1908, when the Indian system was first seriously tested ; and an
estimate is given of the amount of the rupee circulation. Mr.
Keynes also raises the question whether the gold standard re-
serve ig^.. purely currency reserve or in part a banking reserve
(pp* uu7-16b). He concludes, after a very interesting discussion,
k that in practice the Government will not be able to restrict its
responsibility to the currency. Here, again, we have an argu-
ment for a 8tate Bank, as Mr. Keynes notes in a later chapter
(p. 236). The difficulty of treating currency questions without
referenc e to banking conditions is similarly ^’illustrated in the

569

1918] KBTNBS; tNDIAN CURBBHCT AHD PINANCB

♦

Nicaragua currency scheme recently framed by Messrs. Conant
and Harrison, where it has been considered advisable to combine
^jprovifiipn lor seasonal elasticity with provisions for the mainten-
ance of the gold exchange standard. Mr. Keynes is very good
where he shc^s (on p. 176) that India can gain nothing, and
may lose, by holding the gold standard reserve in India rather
than in London. Bwt. he recognises “a powerful, natural, and
yet unfounded prejudice ” to the contrary ; and finally concedes
that India must be allowed, I suppose, to hug her sterile
favourite.’* The comparison Mr. Keynes draws between this
Indian prejudice and the Continental policy of holding large gold
reserves does not seem so happy. He can only see wh^t he calls
“the original sin of mercantilism” in the anxious care with
which most European Governments accumulate and guard thgir
gold reserves. But it*is notorious that their action is deterramed
by political more than by purely banking considerations. They
always have in mind the emergencies connected with war, more
particularly thS probable withdrawals for hoarding, and the
enormous expense of mobilising their huge armies, for which no
adequate p^’epar'otion is made here. They believe that at such
times large cash reserves are indispensable, even to coun^,ries
with the best credit. Thus, even ablate as February, 1913, the
German banker^ put the amount still hoarded in consequence of
the Balkan War crisis as nearly .^25,000,000. Bismarck said, ir^
1871, that but for the w^ar treasure, Germany would not have
been able to gain the two days’ start which prevented the invasion
of the whole right bank of the Ehine ; and Riesser estimates that
altogether the German Treasury would rCcpiire £122,500,000
for outlay during the first six weeks of war. Eight or wrong, ^
the opinions of the Continental Powers on this mattet are
based on the most thorough and up-to-date historical and
statistical researclv It would take p good many Budgets to
convert them to the happy-go-lucky reserve policy which prevails
here.

Summing up the* results of thisihhapter, Mr. Keynes fixes the
necessary currency reserve at about £40,000,000, apart from the
various Government balances, and be thinks that tbip,,sum would
also be sufficient to meet the adveiise balance on ali*accounts
“likely to emerge in a single year,** perhaps even sufficient in
the case of two successive j3ad years (p. 169). It is perhaps the
first estimate w’hich has taken account of all the possible liabilities
of the Government, and the argument carries conviction through-
out. It should be noted that in this chapter p. 140), as in

670 THE ECONOMIC JOCENAL [dBO.

other places p. 110), Mr. Keynes often n^s ^rupees*’ to
toean currency notes as well as rupee coins. ‘

Chapter vii. contains a concise but admirable acpotot jof the
Indian banking system. Mr. Keynes admits his indebtedness, so
far as the Presidency Banks are concerned, to M5*. Brunyate’s
Account, published in 1900; but he has used it to Excellent
purpose, and brought the figures up to date. The descfiption
of the special business done by the Exchange Banks shows his
reimirkablC familiarity with ^actual bueiness practice ; and fiis
analysis of their banking position is singularly clear and acutee
The passage in which he shows tlr^ the strength of exchange
partly dej^ends oh the policy adoptfed by fhese banks may be
specially noted. The account of Indian joint>stock banking, too,
is pf great interest. Here our author finds much to criticise,
and his strictures have received a striking justification by recent
events. After analysing such returps as are available, he observes
that, in his opinion, “‘these figures reveal an exceedingly serious
state of a flairs ” (p*. 224) ; and he says of the smaller banks that
“it is haul to doubt that in the next bad times they will go
down like ninepins." Within six months the forecast has been
realised. His other criticisms in this chapter seem to deserve
serious attention, especially what he says of the marked fall in
the reserve ratio of the more solid banks, and of .the growth a
kind of wild-cat banking, unknown anywhere else in the British
Empire.

Finally, the cliapier concludes with a statement of the argu-
ments for and againsf a State Bank in India. One of the
strongest is to be foifnd in his last chapter, on the Indian discount
^rate, wliere he shows the wide annual fluctuation in the rate.
It might, indeed, alniost be said that most of the * practical
suggestions in the book point in that direction. But he is under
no illusions as to the practical difficulties in tfee way, and is not
sanguine that anything will be done in the matter while times
are good. “We may have to wait," he coiickKles, “for the
lessons of a severe crisis." ^ ,

The main result of this remarkable inquiry may be summed
up in tvj^^entences. The Indian gold standard system is in
principle^ound, and in corfformity with the general practice in
ajmost all countries; while, on the other hand, the banking anJ
note-issue systems are anomalous, anej call for reform, especially
on the points of elasticity and centml control. India, in short,
is diagnosed to be in very similar case to the United States!
These conclusions seem amply made out, and, indeed, unassaU-

1918] - KBTNflS : INDIAN CyBBBNOT AND FIKANOB 571

•

abl6. At such a time as this, tvhen the whole system of Indian
finance is under examination^ it is of the greatest importance
that ^ndnmental principles, o*f the kind here dealt with, should
be established beyond dispute. This is exactly what Mr. Keynes’
book has acctomplislied. It is a most timely achievement, a
service ,of the highest practical importance.

If the book is^ regarded from the academic standpoint, it
seems equally welcome. It is a notable departure from what
has been called the fashivmable styl^in recent English economics.
Technical af)paratus is kept in its place— behind the scenes;
evidenced, but not advertised ; as an architectural painter* will
use perspective witnout exj’^sing his technique. ^1];' contrary
habit is severely but justly criticised by Professor Nicholson in
an article on the Vagaries of Rcceiii Political Economy, in tlie
current number of tbe Quarterly Heine iv, Prolessor Nicholson
will find Mr. Keynes* book refreshing. It is an eri^ihatic justifi-
cation of many contentions in his article. The “fashionable
terminology arid the usual curves ” are here replaced by the
purest Fjnglish and the simplest statistical tables. Nothing, by
the way, is bett‘'r than the statistical work. No figures are given
but such as are strictly relevant to the argument ; they# are
handled with all due allowance for exceptional or disturbing
causes, and ihejir evidence is interpreted with unusual caution
and sagacity. •

There is not much room for originality on the fundamental
principles either of currency or banking. This is especially the
case writh regard to currency. The searching discussions which
followed the monetary disturbances after 187h. and the admirable
work of men like Dana Horton, Lindsay, Conairi, and others,
have led to a remarkable advance, almost q re\olution, in expert
opinion on monetary subjects. But most Tead(‘rs wdll learn the
extent of this advance for the first tim^ from Mr. Keynes’ book ;
and the most blasd student of currency literature will be delighted
by the freshness of the handling throughout, and the acute and
valuable observations with which the w^ork abounds. The general
public, indeed, may find some passages rather startling, as where
Mr. Keynes refers with scarcely veiled contempt to the “sound
currency” maxims of the last generation, or to the mechanical
principles on which the venerable Act of 1844 was based. But^
they will be reassured by tjie evidence given on every page that
Mr. Keynes knows what he is talking about, and has taken full
account of business practice in this and other countries. See,
for instance, the ^vory sound appreciation given in chapter ii. of

672

THB ECONOMIC JOURNAL

[dec. 1913

the international banking position, and the many passages
dealing with exchange. The tone^ of banter adopted on p. 143
may be regretted, for an honest concern to prevent ^vejn the
suspicion of corruption is hardly a matter for ridicule, least of
all in these times ; but this apart, the author’s general caution
and reserve are beyond criticism. Academic bureaucrats may be
interested in a dictum on p. 238 : “It is a remarkable thing that
the two classical pronouncements on the fundamental problems
of indian * finance which hgbve stood • the test of time — WTr.
Dickson’s in 18()7, on the ^question of a Central Bank, and Mrr
A. Mm Lindsay’s, in 18V8 and subsequently, on the regulation of
a gold stai^dard, Should both have (feme froin secretaries of the
Bank of Bengal, not from high officials of State. “ Wisdom is
als© showm (p. 221) where Mr. Keynes urges that “an insistence
on due publicity, rather than compulsion or*regulation in matters
of polky, is lil^ely to be the best remedy” in dealing wdth banks
. of established •position.

But felicitous passages abound, and one mighf go on quoting
until the autlior’s copyright was seriously infringed. Enough
has been said to show that while academic students will be
grateful for t^is acaite and informing \vork, it will be read with
as much interest, and perhaps even greater appreciation, by men
of business and afl'airs. It deserves to rank in tjiis respect
ttie work of Ikigehot and Withers. The author, indeed, gives
proof of a remarkable and very rare union of qualities which j,kace
him in the front rank of living economists. He combines with
first-rate analytic power and grasp of principle a thoroughly
realistic bent and wfde familiarity with business and administva*
tion. His exposition is quite exceptionally lucid; his judgment,
sagacity, and caution ;ire evident throughout; his style is terse,
exact, incisive, and eminently readable. Generally, and in this
point of style more especially, the book coj^stantiy recalls the
brilliant wmrk of Jevous.

H. S. Fox WELL

Indian Offer of Imperial Preference, By Sir 1?oper LE'^HURiDOE,
K.C.l.E. (London : P. S. King. 1913.)

Sir IiOPER LETHBRiDGKTias made the important discussion on
imperial preference, w'hich occurred last March in the Legislative
Council of the Governor-General of Imlia, the text of a fresh plea
for the adoption of that policy to regulate the relations of England
with her great dependency. The imposition of free trade in
opposition to “the considered wdshes of the Indian peoples” is,

IiBTHBBIDGB : INDIAN OFFBB OF IMFBBIAL PEBPKBENCE 57S

in the writer’s opinion, monstrous arrogance and oppression.”
Protection against all the wprld, which is what most educated
IndiMJS lEavour, might, it is admitted, raise the cost of living in
India, and is impracticable so long as England controls its
destinies. Sir Eoper Lethbridge finds in tarnation of foreign
imports and imperial preference salvation for both countries, and
draws a glowing piqjiure of the consequent rapid expansion of mill
ipdustries, which will relieve “the congested agricultural industry
and develop the immen^ latent resources of the country.” ♦Not-
•withstanding Mr. Austen Chamberluin’s laudatory preface, the
pamphlet cannot be callec^ a weighty contribution to that •“full,
temperate, and unbiased oNsideration of theP wh^l§ question”
for which the Indian Finance Member pleaded. Its whole state-
ment of the case is exaggerated. Of this an example wilt be
found on page 124, Where the writer refers to the millions 6t acres
of wheat land in the Punjab^which will be brought under canal
irrigation and the plough “the moment that the stimulus is.
applied ... of an assured preference of 2s. a quarter.” Luring
the past twenty years the construction of new canals in the
Punjab h*"S bcv-n carried out with the greatest energy and success.
Colonists have flocked to the new lands the moment they became
available without any stimulus bift the keen land hunger that
exists. There is little coijgestion in the Ihinjab, and the “armies ”
of “landless cultivators ” are a figment of the imagination. •
Sir Koper Lethbridge assumes that the one thing needful to
secure that rapid development of mill industries, which he holds
to be urgently necessary “to relieve (India’s) congested agricul-
tural industries ” and to furnish the Government with a means of
obtaining money to replace the lost opium revenue, is import taxes
on certailj commodities which non-British countries send to India,
and export taxes on certain commodities which India sends to
them, together with preference in British markets. Agricultural
congestion exists in some crowded districts in the east of the
United Provinces and in parts of Bihar and Bengal. Taking the
countTy as a whole it is not a serious or an increasing evil. In
the most thickly populated track, the United Provinces, the
growth of population in the past twenty years has been extremely
slow, and this is also ;jirue of Bombay. The population of the
'Punjab declined between 1901 and 1911, notwithstanding a large
extension of the cultivated area. Even in Bengal the rise in
twenty years was only 6 or 7 per cent. There is scope for the
expansion of fnill industries, but very rapid expansion is fortu-
nately not a matter of overwhelming importance. The country is

574

THB ECONOMiC JOUENAL

[dec. 1913

•

not i<ia(Jy for it. The want of trusted leaders of industry, of
trained managers, and of etficient workmen is a greater obstacle
than any cjommercial policy imposed by Englahd* •

There is at present an export duty on rice and there are
moderate import duties on a large list of commodities* It is prob-
ably quite true that a finance minister, who was faced with large
recurring deficits, could increase the number of the former and
enhance the rate of the latter in the case of non-British imports,
without prcAroking retaliation. It may further be admitted that Jiis
action would not raise the cost of living for the all-important ‘
agricultural class, which clotlies itself with the products of Indian
and English cotton mills and is for4he niosf part content, with
crude native sugar. But it is difficult to assert that the need for
suclj measures has arisen. In his Budget for the current year Sir
Guy Fleetwood Wilson allowed for a reduction of two millions
under opium, jiutting the anticipated revenue at less than one and
a half millions. * But Ife was able to show a surplus of £1,300,000.
The loss (d‘ the opiufn revenue is, none the less, a Serious matter,
for receipts from land revenue, which contributes *21 millions to the
revenue, are liable to violent fluctuations, every Indian Budget
being^^a gamble in rain.” Sir Roper Lethbridge's assertion that
there is little room for further enhancement of the land revenue
is open to argument, and his statement that “it already ab§o^i3
about half the proceeds of the cultivation of the soil ” is wholly
misleading. Surely he does not believe, as Mr Keii Fardie once
did, that the Government takes the money equivalent of half the
produce. Mr. T\eir Hardie confounded half the produce with half
the rent wdiich the latidowner receives, or would receive, if he let
his land instead of filling it himself. Of course, the actual assess-
ment Is often far below the standard. The excise revenue Is
increasing, notwithstanding Sir Roper Lethbridge’s curious mis-
statement that (he Indiaq peasant “does drink alcoholic
liquors.” He fails to notice the more satisfactory source of
revenue whic.h the Government possesses in the increasing receipts
from railw’ays and canals. It can borrow for f>roductive woiks at
less than 4 per cent., and in the last four years tfie interest earned,,
by railways on the large capital invested in them by the State
has been II , 1|, 5, an.d SVV-per cent. In 1912-13, a very pros-
perous year, the railway surplus was fi^e and a half millions. *
Pl-oductive irrigation works earned 9 g^r cegt., and the surplus,
after deducting loss on protective works, exceeded one million.

There is no attempt to explain in detail how each of the* pro-
posed taxes will help the development of Indiancmill industries**

: INDIAN OFFBB OF IlfFBBUD PBEFBBBNCE 575

•

Till labour and other ocffiditibns change, tazation aimed at foreign
countries may well operate maiirly to divert work from Continental
to English mills. ^ If this occurs there may be a very awkward
clamour for the closing ot the breach in the protective wall.
Special stress is laid on the cases of jute, cotton goods, and sugar.
In raw jute India has a monopoly. Betvreen 1876-77 and 1906-7
the value 6f the exports rose from 1| to 17 millions. Most of
the jute goes to foreign countries. It cannot be argued that the
Calcutta mills, with all. the jute in the wwld growing at^their
^oors and their command of cheap labour, require protection.
They supply India, and t^heir exports rose in the period ^bove-
mentioned from haK a million to over ten. The amount of cotton
goods received from countries other than England is^very small.
On page 63 Sir Eop^r Lethbridge says that certain figures given by
Mr. Dadabhoy showaconclusively that the dangerous competition
to the Indian industry comes from Japan and China. Mr.
Dadabhoy pointed out that Japan had ceast d to buy Indian cloth
or yarn, andi-^hat exports of cloth to China had shrunk enor-
mously. He did not allege that Japan was sending cotton goods
to India, thou^^h as a matter of fact she does send a little. Our
silver policy seems to favour Japanese and Chinese products
unduly, and it would not be haid io justily an enhanced import
duty.

It is true ^lat there has been a remarkable growth in tl^e
imports of refined sugar, and a shrinkage in the area put under
cane. Cotton has become a more important canal crop, and the
canal officer probably welcomes the change, because cotton takes
much less water. The yield of sugar in Indit is very low, probably
one-third of that in Java, which now^ commands the Indian
market. , The methods of extraction are primitive, and no country
can now produce sugar successfully ivhich does not adopt the
“central factory.”^ There are special difficulties about its adoption
on a large scale in India, and till they are overcome it is not much
use to apply the stimulus of an import duty.

A% regards preference, Sir Kojier Ijethbridge quotes a resolution
of a body of Indian planters in which raw' cotton is included in a
list of commodities fitted to receive it. But probably he does not
expect England to tax American cat ton. , As to wheat, the 2s.
• duty has been jettisoned, and possibly may not be fished up
again. India can readily dispose of all its surplus wheat. Indian
tea captured the English* market long ago. Protection might
stimulate the growing of coffee, cocoa, cinchona, and rubber in
the limited parts of India suited to their production.

576 XBE ECOHOMIC SoVBNAL [&BC,

fi.

'iari|E reform and imperial preference might enable the Indian
Government to raise more money without appreciably adding to
the burdens of the people, but no sifch marvellous development of
Indian industries as the writer anticipates would fdlow* If
England adopts tariff reform, the inclusion of India, is not likely
to do it any harm, and may perhaps be of some advantage
to it. It would at least go some way to meet the views of the
small educated class. Their opinions on the question, if not
ident^ical with “the considered wishes of the Indian peoples,” who
have never heard of the matteV, can no longer be met by a blank
refusal to consider it. *

J. M. Douie

Adfart^e, hidia! By M. dr P. Webb, C.I.E. (London : P. S.

King and Hon. 1913. Pp. 184. Price 5s.)

_ To the chairman "of the Karaclii Chamber of Commerce we
owe in a great measure, if indirectly, the inquiry in^o the currency
policy and financial methods of the Indian Government which is
now proceeding before a Royal Commission. Swayed, I doubt
not, by honest conviction, Mr. Webb has discharged, somewhat
violently perhaps, a public duty and, thus far, his zeal and energy
are praiscwoilhy. Yet there is much in the presentation cf his
Qfise to which objection may be taken on p>olitical, as well as on
economic, grounds. In a previous book, Briimn’s iJilemniu., Mr.
Webb set forth his cdiarges against tiu'. Grwcmmcnt of India and
the India Office charges which are now engaging the attention
of the Commission.* The present publication recapitulates and
particidarises, but adds little that is new beyond an interesting
chapter on Indian banking and a much-to-be-deprecated., because
bitterly partisan, attack on the British Chancellor of the
Exchequer.

The author’s theme is, as before, the Re^rt of the Indian
Currency Committee of 1898, commonly called the Powder Com-
mittee. That Committee, approving the Mint Closure Act of
1893, recommended tliat the sovereign should t>e legal tender in
India, the mints opened to the coinage of gold, and the profits
on silver coinage kept^ m gold as a reserve fund for xnaintaining
the exchange value of the rupee. The failure to open the mints.
t& the coinage of gold and to encourage sufficiently its circulation ;
the continuance cf rifpee coinage on a "large scale ; the accumula-
tion of excessive cash balances and their allegtod mis-use in
London-tliese form the burden of Mr. Webb’% plaint.

WEBB ; J^VANOB, INDIA

677

1918]

*And the remedy? “Indiji should have a gold currency; and
the sooner the better.” It is, we are told, “India’s ambition to
be equipge^ with the best monetary tools and the best monetary
systefh”; feh’which ambition, it is claimed, the Government of
India is in sympathy, while the India Office thwarts India’s
intentions in the interests of a Lombard Street plutocracy..
India’s ambition is difficult to gauge, but it may be safely said
that she concerns herself little with monetary systems, while the
views of the representatives of her mercantile classes .who do so
concern themselves are generally Opposed to the policy of Mr.
'C^ebb.

Impolitic, and no longer true, is the statement that ^‘the
divorce of the purchasing power of coined sifver ir^m* that of
uncoined silver deprived many of the poorest and most ignorant
of a portion of their savings.” In the days immediately foljowlng
the closure of the mints the statement was plausible ; but the
subsequent course of the sil'v^er market, ip spite* of increased
imports of the white metal by India, proved ^hat legislation had
merely anticipated the fall wdiich more powerful, if more slowiy
operating, causes would assuredly have brought about.

The au.hcr^s views on banking are peculiar, and his definition
of the business of the modern banker unscientific. He is opposed
to the creation of a State Bank, doubting “the wisdom of carrying
bailing concentration to a degree which, in case of accident,
might jeopardise the welfare of an entire continent,” and scorns
the “theorist, or even the practical London banker (with no know^-
ledge of India), who believes it possible to amalgamate the dis-
cordant elements of the Bengal, Bombay and Madras Presiden-
cies.” Yet he must be aware of the great area already served by
the Bank of Bengal, and of the discordant elements amalgaflfiated
from Eangoon to Lahore. Instead, he advocates the multiplica-
tion of “Indian banks, created in India by Indians ” ; rejoices that
“more Indian banl^fe are corning into aiistence every year. Such
developments can only have the happiest results,” and gives a
long list of banks w]?icli are “doing good work for India.” The
list afflrights me! It includes the Credit Bank with seventeen,

. and the People’s Bank with sixty-four, offices in India. Both
institutions, with several others of the like class, have since sus-
Ijended payhient, and the whole position of Indian-managed banks
has been dangerously shaken! “Credit,” wrote Bagehot, “is a
power which may grow, but cannot be const^;^.icted.” Mr. Webb,
however, would jerry-build it !

Part III. consists of the precis of evidence prepared for the

578 THE ECONOMIC* JOlSfeNAIi [DBC.

Koyal Commission by Mr. Webb, should be read in conjunc-
tion with the report of his examination in th^ recently issued
“Minutes of Evidence” (Cd. 706Sf). In that searchmg examina-
tion much of the case set forth in this book crui®fed^away.<^
There remained little but the justifiable condemnal^ion of bloated
cash balances and of the neglect to hold at least a portion of the
coinage profits in actual gold. Events have moved rapidly of late
in the East, and the statement that “India is the land of dear
capital and England the land of cheap capital ” alniost needs
inversion to be a inodern triitem. India floats her loans on better
terms there than she can ck> in this country, and Mr. Webb could
not^eny, when (Questioned, that a ^reat industrial concern can be
financed tke year round in India on terms which Would be cheap
enough here. At the last annual meeting of the Indian and
Gfmeijal Investment Trust, the chairman said “It is a curious
feature of the lime that, whereas the rate of interest is rising in
almost all other countries, in India it is still tending downwards.”
India has her*reciyTing periods of dear money, but w^e must not
confuse seasonal stringemey wuth chronic scarcity.

A difficult and highly technical subject has been handled, on
the whole, wuth more practical boldness than theoretical know’^-
ledgb, and tl^ author has not justified his unsparing criticism of
the existing currency system* of India. Mistakes there have been,
vacillation and hesitation there have been, but the great cuTitncy
•experiment has been a success. India has i)r')spered mightily ;
her merchants, her traders, and her agriculturists have alike
shared in that prosperity. And therein lies the justification of the
currency reform, llie time was ripe, liowever, for an investiga-
tion which would reveal tlie mistakes that had been made and
provj^le against their repetition. Mainly by the tireles^^ energy
of Mr. Webb has that investigation been brought about, and he
may, too, claim credit for having indicated by his criticisms the
line which the inquiry slfciuld take.

H. M. Ross

Arthd Nccti. By Professor J. Samaddar. (Published at^
Howrah in Bengal. 1918.)

The book under review makes no claim to originality. It is
^n attempt to present, in the most elementary form, the principles
of English Political Economy in the Bengalee language. Nothing
wmrth mention nas hitherto been done in that language in Political
Economy, and it is to be hoped that as more is written on the

579

1913] ' SAMAl>l)4:i^: Abtha nebti

subject in the language of tl\p people of the country, a distinct
Indian school of .economists will gradually be evolved. The
present bpol, therefore, wouldMeserve all the credit of a pioneer
•if onljl^ill: had done its task in any tolerable manner.

We fijK. it^ however, a disappointing performance. The intro-
ductory chapter seeks to give a general idea of the history and
development of the science. But this purpose has only be^n very
imperfectly realised.* The author’s history of the science from
tilt sixteenth century onwjirds is but a string of names which^can
l^ave no impression on the mind of tbp general student. A wrong
impression is left by the ^way in which the conception of ^ the
Economic man is represented as the basis of an f^xisting school of
English economists. The descriptionH of the Historical school,
and of Professor Marshall and his followers, are very inadequate,
and sometimes almost .meaningless. About the Historical school,
all that the author wTites is: “The economists of this school
arrive at their conclusions aftdr considering the relation of the
present social c(^dition of a country to its history in the past. In
their opinion, no conclusions on any subject ought to be arrived
at without due consideration.” Professor Marshall’s characteristic
principles are said to be, that “the character and efficiency of
every man depend on circumstances,” and that “prftgress in arts
and industries can be achieved only if peojde are employed in
those tasks for wliich they are specially fitted.” ^

Worse mistakes lie scattered through the book. The author’s
explanation of the Law of .Diminishing Returns, for instance, is
absolutely meaningless ; and he makes a mistake of the worst
description. Here are his own words, translrted : “In trying to
increase the value of the produce of the soil by increasing the
labour and capital employed on cultivation, the quantity of
produce is gradually dimiriisJied.” The exjilanation that follows
is almost as meaningless as the enunciation. In the very next
page he defines a “dose of labour and capital employed in cultiva-
tion ” as ‘all the labour and capital employed on a field before
the limit of productive, employment is reached.”

Borne credit is due to the author for his renderings of economic
terms into the Bengalee language. Yet even here, some of his
efforts are scarcely felicitous, “Enesgy,” “utility,” aitd some
other terms can be instanced.

A special feature of the book is the chapter on Co-operative'
Credit Societies, which talies up fully a fourth of the whole.
There js more of exhortation and praise in the chapter than of
science. There can be no doubt that the indebtedness of the ryot
No. 92. — VOL. XXIII. B B

^BO THE ECONOMIC^JOTJRNAL [DEC.

and the grinding rates of interest pf’evalent in ^ndia, stand badly
in need of a remedy, and that co-operative credit societies can
do something in that direction. ^

There is a marked want of a due sense of proportions allot-*
ment of space to the various subjects under discussion. Co-
operative credit, as stated above, occupies a quarter ot the book,
w'hile only half of that suffices for Money, Banking, International
Trade, and all kindred subjects. The Quantity Theory, the doc-
trin^> of l!titernational values, Gresham^ Law, the whole subject
of Banking, and many other subjects get no consideration, whiie
twelve pages have been devoted to a,, consideration of the ix)licy
of free primary education. •

S. C. Das Gupta

Good and Bad Trade : an Enquiry into the Causes of Trade

Fluctuations. By R. G. BTawtrey. (Constable and Co.

1913. Pp. 279.)

Mu. Hawtrky’s essay is a continuous argument without foot-
notes or references, and the only writer to whom obligations are
acknowledged is l^rofessor Irving Fisher. The book starts
promisingly. Most expositions of the theory of money are framed
in such a way as to suggest, though they do not really iiu})ly ,rlhat
*the value of money is determined in some special and peculiar
way. Mr. Hawtrey’s manner of statement avoids th’s false sugges-
tion. By seizing uj)on the proportion of their resources that
people choose to keep in the form ot money as the central fact
through which the demand for money is determined, he makes
it ea*sy to see that the determinants of value, in the case of money
as in tlie ease of all other things, are simply the general’ conditions
of demand and supply. The way of stating the matter vtliicli
Mr. Hawtrey has adopftMl is, of course, hf miliar to pupils of
Dr. Marshall ; but it has not, so far as I am aware, hjtlierto
found its way into ordinary books. ^

Mr. Hawtrey’s purpose is not, however, develop a* theory
of money, and he does not proceed far in this dire<dion. His.
main thpsis is concerned with the causation of fluctuations. As
a means of iiivestigaRng this problem, he starts with 'the abstract
ccase of an isolated country without a banking system, and em-
ploying only paper money ; and he inquires what would happen
if the stock of money was suddenly diminished. Having answered
this question, he asks the same question again in reference to
more and more complicated conditions. Thtis, he first takes

1913]

581

HAWTREY: GCfOB AKD BAD TRADE

account of the existence of 'a banking system, then of inter-
national commerce, then of th^ use among commercial nations of
gold^^trency. He recognises that the most important form in
which a v^^^minution in the stock of money appears is that of a
diminution of the stock of bank-money. “ Something occurs to
make the banking community reconsider their position in. one of
the countries where ^there is inflation, that is to say, where the
amount of credit may have outstripped the prudent proportion
to ihe supply of legal tef^der money” (p. 176). The resulfs of
the consequent reduction of credit op the part of bankers are
traced in an elaborate de^v^tive argument. The author then
states generally, while admitting, of course, thset a aelailed proof
of this statement would require much statistical investigation,
that the movements, which his deductions suggest, are sirnilai^to
those which in fact odcur. “Wo have showm,” he writes, “that
the monetary organisation of .the w^orld niight b« expected to
engender just such periodic fluctuations as do actually occur”
(p. 215). Heiit^e, he concludes, the explanation of fluctuations
which he has proposed is, in a rough general way, “verified”
in experience.

Mr. Haw’trcy’s deductive argument is, for the .most paftt, a
restatement in an elaborated form of commonly accepted analysis.
A cdn-traction of the bank-money supplied by bankers causes
dealers to offer lower prices to manufacturers, and so, in turn,*
checks productive activity, until the resistance wduch wage-rates
offer against conforming with the altered level of j)rices is over-
come. The relations between the country priujarily affected and
other countries somewhat mitigates this result, because it allows
of an inflow of bullion, which indirectly checks the fall of pfices.
“The 'depression is by this means allevijited in the area of
stringency, but only at the cost of being extended in some degree
to all the other countries” (p. 105). .There is little to quarrel
with in the general lines of this familiar reasoning. Sometimes
a lapse occurs. Mr. ^awtrey repeats the popular argument that
governffient authorHies cannot steady industry by adjusting the
.period of their investments, because the money to be spent by
government can only consist of money that w'ould otherwise have
been spent* by private firms. He does not perceive that this
argument contains a fallacy, nor is he apparently aware that,
the fallacy has been exposed. Still, his deductive reasoning as
to the way in which an initial monetary disturbance tends to
work itself out seems, generally speaking, to be sound. Further-
more, the steadiness and clarity of vision with which he follows

R H 2

582

THE ECONOMIC WOUBNAL

[dec.

th*'. thread of his argument through 'successive stages of complica-
tion are deserving of cordial praise^ The method he has adopted
is a difficult one, and to carry it through successfully •demands
the sustained effort of an able mind. Though the resultf?4,ttained
are not novel, Mr. Hawtrey, in throwing open so w^l^constructed
a thoroughfare towards them, has lone a useful work.

There remains, however, one important jriticism, which it is
necessary to make upon the book as a whole. Mr. Hawtrey, as
has •already been indicated, .is not content with analysing r the
way in which such a chaqge as a contraction in the supply df
bank-money works itself out. He ai^ues — or seems to argue —
further •th^t, becliuse in the real tvorld monetary and banking
movements are associated with industrial movements in the way
that his argument leads him to expect, therefore in these
monetary and banking movements the caftses of industrial fluc-
tuations have# been discovered. IJe speaks in so many words of
the “inherent tendency towards fluctuation “ in “the banking and
currency system wfiich actually prevail in the worRl at the present
time “ (p. 216) ; and the whole drift of his discussion implies that
the causes of fluctuations are exclusively monetary and banking
causes. Such point of view is exceedingly superficial. To
show that a certain disease is always accompanied by certui)^
symptoms, is by no means to show that the symptoms ai'Cc^the
tiause of the disease. It is undoubtedly the case that tlici funda-
mental causes of industrial fluctuations often make use, as it
were, of monetary and banking systems as the medium through
which they act. But there is no reason to suppose — indeed, there
is abundant reason fo deny — that they are themselves in any sense
resident in these systems. Variations, for example, in the
general bounty of natjuro, or waves of confidence or depression in
the outlook of the business community, exercise much of their
influence upon industry tUroiigh the banking system ; but they
themselves lie wholly outside it. Mr. Hawtrey has faiied to
grasp this imj:x)rtant point. As a consequence, Le has shut him-
self off from what might have been a very interesting inquiry,
namely, first, how far does the peculiar mechanism of the mone-
tary anj^ banking system augment the fluctuation-producing
power of the causes that work through this mechanism from out-
«side ; and secondly, what is the relative importance of these
causes as compared with those that origina<fce wdthin the mechan-
ism itself? furthermore— and this is a still more unfortunate
result— the surprising defect in Mr. Hawtrey 's argument, to
which attention has just been called, makes itself felt continually

1913] HtTABT : l’obganis^tion DU cbAdit en pbancb 583

in the course of his exposit^jon, and throws the whole picture
somewhat out of drawing.

A. C. PiGOU

L^Organisation du Credit en France {Etude compar^e des prin-
cipaux sysUmes de Banque). By Albin Hu art. (Paris :
M. Giard & Brifere. Pp. 348. Price 7 francs.)

•In issuing this book the author* undertakes to fill the vdid in
Prench economic literature occasiqped by the absence of a
scientific study of banking^ and credit, and expresses his sui^prise
that such a work has not bt.en attempted hitherto. ^

From the comparative standpoint there is much that is new in
the book, but there is nothing novel in the author’s treatment of
credit transactions anti the banking oi)erations to which they give
rise. His chapters on these matters hardly fill a gap in French
literature; Victor Richard’s Traitc Elementnire des Operations
de Banque, although not exhaustive, is aii excellent work on the
subject, while Les Operations dc Banque, by Courcelle-Seneuil,
is a brilLant analysis of the economic side of banking and
currency. • •

Apparently the work is intended*to meet the needs of students
taking a special course on the principal banking systems at the
“Ecole des Sciences Politiques,” and for that reason the fir^
twenty-five pages are devoted to an explanation of^ the various
forms of credit, followed by the bases of a rational banking
system. M. Huart advocates the principle of a single Central
Bank, with sole note-issuing powers, and in view of this privilege
he would have its operations limited in a very precise manner by
legal enactments. Apart from its note iss^ue, his opinion is that
the functions of such a bank should be confined to the fixing of
the rate of discount, the discounting .and re-discoimting of com-
mercial bills, and advances on securities. It is to be doubted,
however, whether bank could successfully limit its operations
in thii^ way ; and :n any case it is unlikely that such an institu-
tion could exert the beneficial economic influence the author
ascribes to it. A single Central Bank with the monopc^ of note-
issue may* or may not ensure the indusVial and commercial
progress of a country, but in view of the unparalleled success of
the British system, one is«ot convinced of the higher merits of
the author’s “banque rationnel.” Economists, moreover, will be
inclined to doubt the impartial examination of banking systems
ait the hands of a writer who states definitely, (1) that the position

684

THE ECONOMIC ^JOURNAL

[dec.

of the Bank of France is superior H that of all the world’s banks
of issue, because of its absolutely private character and its inde-
pendence of the Treasury ; and (2) that the Frerw3h® banking
system is better than similar foreign systems, since it l^ds itself
admirably to the economic expansion of the country? aim does not
commit the errors of certain forejgn banks, which imprudently
convert their disposable funds into real estate •and so entail the
industrial framework of ihe country.

French* banking is said be situapt;ed exactly between «tlie
English system, much too restricted, and the German system*,
muoti too vast. #

Considerable sj^ace is devoted fo an examination of the crossed
cheque : its use has not rapidly advanced in France owing to
certain restrictions. The cheque must be presented for payment
within^ five days, or eight days if drawn fK)m one place on an-
other ; when circulating in ihe place in w^hich it is drawn a 10 c.
stamp is required, oflierwise the duly is 20 c., and this tax the
author believes has*prevenied the greater extensicfti of the use of
cheques in France. Jn this connexion the Clearing Houses of
London and New' York arc compared w ith the Chambre do Com-
pensjy^ion des^Banquicrs de Paris, and the result is interesting
as showing how this method»of centralizing the drawings of and
on the various banks has growm.

• The most interesting part of the book, and certainly the most
useful, is that dealing with the actinl working of the Bank of
France. Itfe operations are treated from three distinct points of
view : those of a credit establishment, of a bank of issue, and of
its connexion w'ith the Government Treasury.

Under the law of 1897 the Bank’s note-issuing powers w’ere
fixed lit francs 5 milliards 800 millions, and the balance sheet, of
5th October, 1911, shoived 5 milliards 530 notes in circulation. In
view of its fixed limit tha author is inclined ,^o the opinion that
the position of the Bank of France might become grave if the
maximum is reached. He argues that the limit of note-issue
should not be arbitrarily fixed by a parliameritary law, but that
an enactment should be in force permitting the note Circulation to
be a varying one in proportion to the monetary situa:ion, as
revealed Dy the Bank’s w'6ekly balance sheet, since dn the not
milikely event of the present maximum limits being reached, the
Bank would be obliged to refuse fyrther calls for credit,' or,
alternatively, to emcroach on its reserve.’

* By the law of 29th December, 1911, the note-issuing powers of the Bank of
France were raJ .ed to the maximum of francs 6 milliards 800 millions (^272,000,000).

1913] HITART : L’oRGANISA!|ION DU CREDIT EN PRANCE 585

•

Such a system is, we imagine, hardly practicable in these
days, and judging by the present policy of the Bank of France,
no change iu needed. The Pretich bank-rate tends to remain very
steady at 3 per cent., and xompares favourably with other
Kuropean lates. For instance, the Bank of France rate from
1876 to 1909, with thirty-one ^ Iterations, averaged 3T3 per cent. ;
over the same period, the Eeichsbank changed its rate 126’ times,
giving an average oi 4*11 per cent. ; while the Bank of England
rate, was changed 200 times, which^ gives an average eff 3*28 pnr
cpent. ; from which it follows that French commerce benefited to
the extent of 0*98 per ‘cenl-. over Geifean industry and 0*15 p^r
cent, over British iifdustry.

The French Government derives a considerable ificome from
the. taxation imposed on the Bank's operations, and the author
gives an instructive aiialysis of the position. The Bank of Brance,
it appears, keeps the Government accounts free of charge, and
taking into consideration this facility, the loss of interest on
advances to fitate, the cost of the manufacturing of bank
notes, and the taxation the Bank pays on its productive circula-
tion, it is estii lated that the Government gains on an average
francs 17 millions per annum from the Bank’s operations. ^

The “productive circulation’* oil the Bank is 'arrived at by
taking the totals of the portfolio, the advances on securities, and
the bills to order. ^

While admitting the inequity of some of the taxes with which
the Bank is burdcnc'd, we are inclined to think that the author
under-estimates the value of the Government accounts. Most
.bankers are well aware of the advantages c criiing to any bank
which is the custodian of State funds, and it is no uncommon
thing for. interest to be paid on such credit balances. A* bank
carrying large State funds is frequently able to obtain a hand-
some return by utilizing the surplus call money on the short-
loan markets.

The extension of the branch banking system in France is
freely .discussed, bit the conditions governing the opening of
branch banks do not compare favourably with our British system.

The book also contains a good deal of interesting matter on
the development of French credit estriblishments, an^i study of
the various methods employed leads one to the conclusion that
the small farmer, the retail trader, and the industrial class aife
much better catered for than are similar classes in Great Britain.
After* showing the interconnexion of the credit establishments,
the author proceeds to point out the defects in the elasticity of

586

THE ECONOMIC t JOURNAL

[dec.

the system, and draws instructn/e comparisons between the
French institutions and the industrial banks of J apan and
Germany and the Credit Populair^ of Italy. » . ^

The chapters on foreign banking are largely given up to an'
examination of the French colonial banks, and a perfusal of the
w^orking of the past few years ic not without interest to the
Englishman. The German policy of creating banks in foreign
countries is, M. Huart thinks, a good one*. The Germans are
ever* ready to extend their sphere of .influence, and whun/ever
there appears the slightest chance of the political or economic
futi^re of Germany benefffeing, a ba/ik, or group of bankers,
furnish the necesgary capital for opening a branch in the centre
in question*. France, on the contrary, appears to rely on the
strength of international agreements, and is committed in a
greatei- or less degree to international banking consortia, which,
however excellent the business they bring to the French
financiers, are jdeplorable from the State’s point of view.

There are many useful banking problems investigated in the
book, and each chapter is followed by a bibliography upon which
the material is based. The author does not appear, however, to
havej3een very happy in his choice of English works, and the
banking books to which he has had access cannot be regarded in
any sense as standard works.

. William F. Spaldino

La Banque Nationale de Brjgiquc, Lcs Theories et !es Fails.

By Ernest Vai;^ Elewyck. (Brussels : Librairie Falk fils.

1913. Pp. vii4-380 + 412. Fr. 15.)

In* so old a trade as Banking, where the human interests in
play are as steady in 'direction as the trade winds, there is an
especially good op{X)rtunit;y for the pure tb'eorist. Elsewhere
theory must stop half-w^ay and take as its units the ideas of the
market place. If it is pressed further and these ideas are broken
up into their constituents, its answers must ..be given in' terms
which common sense and experience cannot evaluate. But in
Banking simplicity and suggestiveness of these more ele-
mentary ideas make •them* worth the stating, even apart from
the consideration that their clear expression removes Banking
^rom the isolation in w^hich its outward form g tend to place it, and
fits the w’ork of the banks into the general system of production.

It is not a complaint directed especially against M.‘ Van
Elewyck to regret that he does not take this opportunity of filling

1913 ] elewtck: la banqub nationale de belgiqtje 58 ?

•

a preliminary chapter in this ,way ; indeed, he is perhaps to some
extent precluded by the terms of reference which he has laid down
for himself . “ J’ai pens4 qu'k |56t4 de la voit socialiste qui accuse
la Banqne Nationale d’etre um* creation capitalipte, plus soucieuse
d’int^rets j^rfyes que de Tinterct public, et qui proclame Tim-
perieuse ndcessite d’une banq(ie d’Etat s’inspirant de I’^^vangile
rnutuellii^te, il etait atile de faire entendre une voix liberale, con-
damnant les excfes de Tintervention parlementaire, si souvent
incom^Ddtente et presque ton jours maladroite. . . .

• “Puisse-je avoir fourni an liberalisme (Vonomique autant
d’arguments que I’^cole secialiste befge en a fourni, depuis. une
douzaine d’annees,*d nos jV irnalistes et a nos pa'*lementaires !
C’est le but principal de ce livre.”

It is, however, so easy to be content wifh the financial ^ex-
pression of events, aixl so very difficult 1o see their true relation
to the social facts which underlie them, that one still regrets that
an author evidently so well qualified should not have given us
more of this part of his experience. When, for example, one
hears that the effect of an event is that the hank rate rises 1 per
cent., the author doubtless knows the rest by instinct, but the
uninformed reader wants to know what this sign in tl^. sky
portends. Do the more mobile exports tend to move ; if so, what
are Jb^^y? Are pommercial and industrial operations contracted ;
if so which, and to what extent? And so on. Again, few people
would be ip a much better position than the “President de la
chambre de commerce de Bruxelles ” to trace the influence of the
banks upon the development of business capacity. The efficiency
oi the factory is increased in a real and important way by the
work of the railway, which enables its separate parts to be pro-
duced at the most efficient sources ; is the effect upon the efficiency
of the business undertaking an important one when the transport
work of the banks and the stock excharge organisation enables its
constituents, capital and business ability, to be produced separately
at their most suitable sources?

It is, however, hardly fair to expect M. Van Elcwyck to have
developed issues which are not strictly relevant to his purpose ;
and, indeed, his method and scope have great admntages of

their own.# • ^

Quite a considerable portion of these two volumes is made up
of well-chosen quota tion8_ .from the work of economists whose
names' should evidently not be so unfamiliar as they are, and from
the speeches of politicians of every shade whose, utterances have a
special interest not only in showing how the political mind

588

THE ECONOMIC JOUENAL

[DEC,

approaches these questions, but also in marking the contrast
between the commercial interest which dominates the adminis-
tration of the Bank of England aryi the many kinds of influences
which affect the policy of the Bani of Belgium.

In this way, by quotation andicoiinter quotation /bounded off
with a curt and dispassionate exiression of his own views, M.
Van Elewyck covers a very wide held in history and theory ; the
origins and growth of the Banque National^ ; the political influ-
encer of tile State and the detailed administrative policy in ^adh
department of the bank. The chapters on L’Escompk,
LTiricaisse et le Poriefeuillb ctranger, -and L’Emission, will prob-
ably be, of the greatest interest to most Economists, but the
excellent analytical table of contents enables one to pick and
chcjose with great ease.

Tlitf'vre is, I think, nothing of importance in this work which
economists wo^uld wish to dispute ; one leaves it with a comfortable
sense that orthodox economic theory has been more firmly estab-
lished by the testimony of a man of business, liitis not M. Van
Elewyck’s purpose to enrich economic theory, and he does not do
so, but he lias his “jx)cket full of sixpences,’’ and the occasional
gleanj of a coin does much to relieve the subject of a natural
dullness, from which neatness of exposition cannot entirely save
it. It is a sound, well conceived, clearly written treatise, in which
the author’s conclusion in favour of greater freedom does not
haunt the pages as an obsession, but arises spcntaneoubJy from
each chapter of the evidence. To economists it gives facts of
considerable interest, copious statistics, and a clear insight into
banking administrafcon of a kind unfamiliar in England To.
“liberalisme economique ” it can be notliing less than an arsenal.

F. LAVING.TON

Commercial Paper for Mcfchants, Banixcrs, and Investor, i. By
Messrs. Bakson and May. (Massachusetts : Babson’s
Statistical Organisations. London : Effingham Wilson.
1913. Pp. 246. 8.9. 6d.)

The pi^^ary object of this work, specified in the preface, is to
assist the officials of *the twenty thousand banks of Uic United
gtates of America in the task of selecting the best commercial
paper. Only a portion of the contents deals specifically with this
subject ; the greittcr part of the volume is occupied with historical
and other details connected with banking.

The advice given as to the selection of such paper is sound,

1913] BABSON AND MAT : COMMEBCIAL PAPER FOR MERCHANTS 689

•

and suited to the local condi|ions which are likely to confront
thdse charged with the responsibility in the United States of
^Ameri^a oi holding it as a seciirity ; though no written instmc-
tions how^wer, wise and clear jnough they may be, can take the
place of cojafnon sense and **.. practical working acquaintance
witii commercial bankirg- ;

The book has % wicJr mterest than the preface suggests, for
the collaborators have appealed to a much larger circle of readers,
to an Appearance, quite unconsciously.

^ In the course of their attempt to dry-nurse the budding
banker, they have laid bare* one of the* deep-seated causes, whlv*h,
on several occasions /have rt^dered the United States of \merica
the theatre of financial crises, from which the banking centres of
other great countries have been^ fortunately, almost free — except
in so far as they have suffered secondarily as a consequence of
American imprudence. The disease, if one may te^jm it so, may
be diagnosed as the custom of putting commercial paper to a use
severely bannc.u in other banking communities. Commercial
paper in Europe, certainly that which is not secured by collateral,
represents goodo actually sold, for which it is not convenient for
the purchaser to pay until a reasonable time has elapsed to pillow
for transit and delivery, and for the? whole or partial realisation
of tli^..goods. The writers of this volume divulge incidentally that
a large proportion of commercial bills in America are created to
cover the period wdthin which a possible sale may be effected. In
other wwds, banks afford facilities to the manufacturer or
merchant to embark upon speculative business, by discounting
•such paper, and providing him with the wuerewdthal to repeat
the operation. If, in England, Messrs. Huntley and Palmer draw
a bill upon the Army and Navy Stores, the bank that discounts
the bill know’^s perfectly well that the biscuits, the value of which
the bill represents^ have been actually sold; but the writers
suggest that in the United States it lies within the power of any
manufacturer in good repute to create bills and obtain funds from
his bankers against '*them on the assumption that his goods wall
have found a purchaser before the bills fall due.

It needs no great flight of imagination to picture tlm in^^rvitable
re^sult that •must ensue when over-suifplied markets, or disastrous
harvests, check, for a while, the national prosperity. The banks
find that they have exhausted their resources in furthering the
optimistic plans of their clients, and in the frantic scramble to
obtain currency, panic and its attendant evils have full sway.
Losses have to be cut and goods sacrificed^ with the result that

590

THE ECONOMIC JOU:^NAL

[dec.

the manufacturer is crippled and his fall involves a loss upon his
bank, which should never have assumed anything in the nature
of a partnership with him in hi& trading risks. •

The authors do not appear to (attach sufficient importance t<f
the personal equation in commelcial bill transactions, for they
throw out a suggestion that specisily unsecured risks could be met
by a system of insurance. The present writer, during his thirty
years’ experience in the City of London, has known men whose
means harve been in extreme inverse ratio to their characters for
probity, and yet whose written engagements were preferred 'to
thaee of incomparably ricHer men. No insurance company can
possibly, discriniimite on matters sa delicate, ‘but a bank manager
of judgment and experience can discern such a risk to a nicety.
In^the old days of private banking in the North of England, many
a now prosperous and flourishing business^has been brought into
being and fostered by the banker’s individual and ])ersonal know-
ledge of the character of the borrower.

This volume is ^)eculiarly topical, in view of tk/^ United States
Government’s desire to reform currency arrangements in
America. It is possible that banks may be federated and em-
pow(yed to inflate the currency in time of pressure, by certain
expedients involving the me of selected (jommercial paper as
part-security for creating additional currency notes. Artificial
expansion of currency bristles with danger, and the selection of
commercial paper for such a purpose be(‘omes a considtiation of
the first magnitude.

In an educational work, such as this volume is intended to
be, the careless punctuation, frequent errors in spelling, and
sometimes irritating lack of lucidity, are blemishes, the more
noticfiable, because the printing, paper and binding are. excellent.
Moreover, Sir Edward H. Holden, when quoted as an authority,
should have his ChristiaB name inserted correctly, and a great
institution possessing a world-wide reputation, such as the
Deutsche Bank, is entitled to have its name spelt wdth accuracy.

Evidently both j)ains and care have beeh^ taken in the com-
pilation and presentation of facts, so as to form a concise book
of refereij^e in regard to the banking practices ol the chief
European nations, as^corapiUred with those of the United States.
The frank admission of defects and disadvantages in those of
Jhe latter country gives to the work an impartial character which
adds to its educational value to officials connected with local
banks.

Benjamin White

1913] PAY : COPAETNKRSHIP IN INDUSTflT 691

Copartnership in Industry, By C. E. Fay, M.A. (The Cam-
bridge Manuals of Science and Litej^ature. Cambridge :
Umversity Press. 1913. Is. :pet.)

‘'The h;bltual code of sehtiment which prevailed between
emt)loyers and workmen in the times when the former were
regarded by both^aw and usage as the governing class Is now
greatly relaxed, and cannot be revived. A substitute has now
to be ‘found for it, aruing from ^the feelings of equity .and
ehlightened self-interest and mutual forbearance, which should
exist between contracting • parties wBo can best promote their
several chances of advantage by aiding and accommodating each
other.*’ Mr. Fay quotes these words on the first page of his
book, and they well represent the spirit in which he treats the
subject. There is, as* he says, “a boom in the theory of’ co-
partnership to-day ; it ‘'is verj much in the air,” and this book
is one of the signs. It is verj" brief, containing little over 30,000
words, and fo/’ a little book it probably attempts too much,
touching as it does on cognate movements such as consumers’
co-operation, agricultural co-operation, and copartnership in
housing — matters difficult to omit altogether and equally dj^ficult
to deal with, in addition to copartnership proper, in so small a
spac^.

I have spoken of the spirit in which Mr. Fay treats tha
subject. When so many are talking of copartnership it is
naturally treated in many spirits. Syndicalists are writing of a
temporary copartnership which they desire , bet vveen a trade union
•monopolising the labour in a given trade, and an association of
employers monopolising the capital and the commercial side
thereef, such temporary copartnership leading the State shortly
to step in and oust the capitalist element. Others talk of co-
partnership, agaiii^ as if it were rneicly our old fiiend profit-
sharing, leaving the capitalist system practically unchanged, save
for the addition of industrial peace, and an improvement in the
w^orkers’ earnings. , ^Ir. Fay seems to see further than this ; yet
he does not put forward as clearly as ardent advocates w^ould
desire the ideal of copartnership as a peaceful, bi^ very far-
rQ^ching, industrial and social transfo'i'mati»-n. They have never,
indeed, preached it as a panacea, but they do claim that in most
forms of employment where goods are produced or distributeef,
whether that employment be under the State or municipality or
some great company, the worker should be given, in addition to
standard wages, some direct interest in the profit of his work.

692 THE ^ECONOMIC JOURNAL [DEC.

e '

ppme direct voice in its control, and, where circumstances allow,
the right to invest in the capital with which it is carried on.
Thus they hope to see industry gradually and peacefully^ trans-
formed from a capitalistic to a cotoperative form. ,

The Times once described copartnership as an* improvement
on profit-sharing : that probably is the view most likely to cdm-
mend it to business men, and it fairly represents the general
impression of the movement conveyed by Mr. Fay’s book. The
imptovemlmt carries us weH bcyondr profit-sharing its^lffi it
consists in capitalising the bonus, or profit shared with tBe
wcw»tkmen. This is the characteristic difference between the great
majority of the earlier English s<?hemes wffiere the profit was
paid to th^ worker in cash, and the later schemes where the
tendency is to accumulate his bonus in the capital of the business,
thus justifying his title of copartner. Put this way the distinc-
tion seems clear and simple, but as Mr. Fay well points out,
you can have degrees of copartnership : it “may be of a simple
or advanced kind.’* Simple “wdien the sharing e: profit is asso-
ciated with their employment in some permanent form, in a
sickness or pension or savings fund, or in a regulated plan of
investment in the firm’s capital ” ; advanced, “when the position
of the workers in the businetss is so deeply rooted Uiat the aban-
donment of copartnership would necessitate a pe/ceptible change
in the composition of the directorate or a serious change in the
composition of the capital. Between iho two kinds of copartner-
ship there is no hard and fast line.” 3n fact, there is no liard
and fast line between profit-sharing in its simplest form (whicli
amounts to very littte more ilian a gratuity), and, at the otlier-
extreme, a complete industrial dcunoeracy. Much fruitful but
necessarily iriconcdusive, discussion has taken place as* to where
exactly the line shoidd be drawn, how much interest in the
capital, and* what share of the rights of sharf holders, belonging
to the workers employed, should be considered the minimum,
and qualify a business to be called copart nershij/. Mr. Fay’s long
acquaintance with, and thorough knowledge* pf, the subject are
w^ell known, and in his limited space he manages to describe
many of tl^. most typical instances of copartnership past and
present, whetlier copiirtncrfffiip between employer an employed,
or copartnership among a body of workmen carrying on their
ihdustry co-OT>€iratively without any employer. The celebrated
examples of Messrs. Briggs, in England, and of Godin and
Leclaire, in France, are followed by the more recent instances of
the English gasworks, of Messrs. Lever Bros;’ Copartnership

1913] FAY : COPARTNEBSHIP IN INDUSTRY 593

Trust, and by a number of others, in this and other countries, less
known but not less instructive. Tn so large a mass of information
it is imppsbjble that there should be no slip, and Mr. Fay has
been ftiisled by the French authority he quotes into thinking
that profit-sharing still exists cn the Danish railways.

• Besides a valuable statement of facts, we have in this book
, not a little of sound comment t pon them. In particular, without
having space to tre<jt fully the relations of copartnership and
tfade unionism, the author takes an early opportunity of, dispelling
the notion that they are incompatible and that copartnership is
advocated as a substitute for trade unions. “Their value,” he
says, “is so great as'to make the substitution of copartnership for
trade unionism a thing neither to be expected not desired. In
the trades where vnionism is established, copartnership must
accommodate itself to^the fact, and while leaving to the unibns
the maintenance of the general minimum, concentrate on the
more equitable and harmonious distribution, of the •surplus above
the minimum.’' He sees, too, and points out that the things
which make copartnership a growing necessity are not confined
to capitalistic enterprises. “As surely as municipal trading and
large-scale production by the co-operative stores are destined to
increase, so surely will they find .the problem (5f capittfl and
labour fastening itself on them with its old dilemma.”

iPhe book is* remarkably free from dogmatism, from any
narrow view of orthodoxy in economic reform, and consequently
from hostility to other theories of reform dealing with the same
problems from other -sides. “Even at the end of our enquiry,”
he says, “we are unable to state categorica^'y the things which
constitute copartnership. For it is not so much a body of things
as a body, with a spirit in it.” This, no doubt, is true; but we
have to remember that science has yet to find proof, that a given
spirit can exist upcgi this planet except with an appropriate body.
Experience shows that with the best •intentions copartnership, if
it is to succeed and endure, needs an appropriate framework,
now beginning to b^ pretty clearly unders^tood. The worker, over
and above his standard wages and conditions, must have a share
in the profit he helps to produce ; he must become a shareholder
in the capital ; and, if copartnership is to be considered full-
grown, he must acquire the ordinary rights of a shareholder.

Aneurin Williams •

594

THE ECONOMIC JOUBNAL

[dec.

The German Cotton IndtLstry, By E. M. E. Dehn. Economic
Series, No. xiv. Gartside Eeports oti Industry and Com-
merce, No. 10. (Manchester : University Press.i. 1013. Pp.
104. Price 2s. net.)

Mr. Dehn was a Gartside Scliolar of Manchester University,
and, in accordance with the conditions of the scholarship, he
spent a year in Germany in investigating’' the cotton industry
there and in collecting material for the present report* ^The
result of his labours is a clear and succinct account of the German
coiion industry which wilUbe found gf considerable value by all
interested in that industry in this country, r

A brief « historical introduction shows that the use of cotton
in Germany dates back to the fourteenth century, and that the
incTustry was twice almost destroyed, first by the Thirty Years’
War, and later by the Napoleonic domination. The industry
spread to almbst every part of Getoiany where the textile trades
already had a footipg, for no one district had, lik^ Lancashire in
England, such climatic advantages as to give it a clear superiority
over the others. The result is that “the industry is made up of
a large number of small industries which have originated at
different tiineft and under widely different circumstances. Many
of tluun, founded at a time when the play of economic forces was
hemnunl in by political divisions which have ‘since cease^d to
exist, find themselves situated now so unfavourably that they
must needs struggle hard to survive. Others have been able to
choose the most favourable ground with full knowledge of the
conditions under wljich they would have to work. These con-
ditions have not prevailed long enough for each district to discover
and confine itself to the work for which it is best adapted. There
is much unprofitable competition, and this is not confined to the
German home trade.” Thp number of spindles^ more than doubled
between J887 and 1909, ifhe number in the latter yetxr being
10,789,239, ijiostly employed in spinning low and medium counts ;
there w^ere also 200,323 looms in 1909. Westphalia is the most
rapidly advancing district, thanks to the advantages of cheap coal
and a more^ humid atmosphere.

Generally speaking, the German cotton manufacturer is
hampered by distance from his fuel supply, and his cotton market,**
tiiough in Bavaria and Wurternberg water-power takes the place
of coal. The cost of a new" spinning 'mill works out at from 40
to 70 marks per spindle, and of a w^eaving shed for plain looms
at from 800 to 1,200 marks per loom. These costs are much

1913] dehn: the german cotton industry 595

hig&er than in England, but they are partly due tb the German
climate, which makes much stronger structures necessary.
Electric ^iv'ing “has made far greater strides in Germany than
‘with ifs. The cause of this is partly the higher cost of fuel and
the proportionately greater importance of power-economies, but
no -doubt the high degree of deyelopment of the continental elec-
trical industries is4o a great degree responsible. In England the
controversy still rages whether electrical driving has any advan-
tages over the old systenj.or not. In Germany discussibn centres
rrther round the question whether iL is the group drive or the
individual drive which is to be preferred.’’ The machiner} is
mainly English. The functions of manufacture^ “nd distribu-
tion are combined to a far greater extent than in England, and
consequently each ir ill has usually a commercial director as
as a technical manage^. The operatives do not make muchAise of
evening classes. “Moreover, since the factory worker tends to be
less expert, the wages he can command in the factory are usually
not very mueb^, higher than those he can command in ordinary
manual labour out-of-doors; and since, in the country districts at
least, the majc'ity of the operatives are drawn from the agri-
cultural population, there is always a good deal of changing over
from the factory to the fields and vice vers A. . . .* Similarly, in
the towns there is a great deal of changing over from one class of
textifes to another,” The stability of the operatives is less, theiii
class-consciousness is less, their sense of craftmanship is less, and
their efliciency is less than in England. “It may be taken that
as a general rule ‘ good middling ’ is used in Germany to arrive
at results which are attained with ‘ middling American ’ in
England.”

The commercial organisation is much behind that of England.
There is no futures market at Bremen, wj:uch port is the prin-
cipal cotton market^ for Central Europe The dealers at Bremen
have their agents in the spinning centres who quote list prices to
the spinners and telegraph or telephone orders to their principals.
These orders have to be sent before the opening at New York
can have become known, so that the dealers can cover in
‘Liverpool. There is no cotton exchange in Bremen, gnd brokers
ax'e an unimportant class. Spinners ^nd manufacturers usually
aeB direct to their customers, and though there are exchanges in
Stuttgart, Chemnitz, and Mulhausen, the bulk of the business itf
done in the office or by telephone.

Local rivalries, political and religious divisions, and the
economic divergence of interests between spinners and >y^eavers,
No, 92.— vox*. XXIII. s d

596 THE ECONOMIC JOUBNAL (DEC.

Impair the efficiency of the employers’ organisation in everything
except labour matters. Employers frequently maintain their own
labour exchanges and employ only operatives provided with a
“ticket,” a method which affords abundant opportunities for’
black-listing. In 1909 only about 150,000 operatives out of,
approximately, a million were organised, and of these 105,000
were in the Socialist union and 35, WO in the Catholic. “In most
cases the employers merely lay down the terms which the other
side may accept or refuse. however, they have consepteJd

to meet and bargain with the representatives of the unions they
hjJT^ usually had little cailse for complaint.” Although wages
have risen from 10 to 15 per cent in the last decade, they are
much below^ English rates, and fines and premium-systems cause
a gpod deal of discontent. “Taking everything into considera-
tion, the standard of life of the German cotjon operative compares
unfavourably with that of the Lancashire cotton operative. Meat
is seen comparatively rarely on the table and is bought in very
small quantitie*s at a time, as prices are high.”^ Workmen are
housed mainly in tenement dw^ellings. “The most usual dwelling
consists of a bedroom, a living-room, and a kitchen,” rented at
from j;hree to six marks per week ; if there is an attic it is sub-let
to a lodger. Much housing dias been done by employers, some-
times in tenement-bamicks, occasionally in model villages.
Where mills are isolated the employer know^s tfiat he alon^ will
profit by the increased efficiency of his workers, and much
“welfare work” is undertaken. This, as Mr, Dehn points out,
tends to keep wages low. Some interesting figures are given as
to wages, but the j^ear to which they refer is not stated, 'l^he
Board of Trade enquiry into the cost of living in Germany and
the German enquiry of J907 into the output of tLo cotton
industry both contain ^interesting figures, but neither appears to
have been litilised.

Henry W. Maorosty

Das Land dcr Monopolc: Amerika oclcr D&utsrhland ? ‘By J.

Singer. (Berlin; Franz Siemenroth. 1913. Pp, xix + 365.

Price &. 8.50.)

This book consists of three parts. The first gives an account
of the leading combinations in the JJniter^ States, most space
being devoted to the United States Steel Corporation. The ‘second
part deals with the principal German kartells, three-quarters of
the section being occupied with the coal, iron, and steel syndicates.

1913]

SINGEE : DAS LAND DEE MONOPOLE

597

The third part compares monopolist tendencies in the two coun-
tries. The descriptions of the various organisations are based on
official lepcrts and bring our information well up to date. On
the whclr they appear to be satisfactory and fair in the present-
ment of fao?fs. The author considers that the development of
** rnixed ” works on a vertical organisation is leading , to the
development of “trusts” within the Steel Syndicate of Germany,
and considers it an open question whether, but for the renewal^
of the* Coal Syndicate ai>d the fonDgiation of the Steel* Syndicate,
the “ vertrustung ” of the iron industry .might not have gone
further. It certainly will be very interesting to watch the ev81u-
tion of those great self-C(.:itained works i^ Wustphalia and
Lorraine, and to see how far they will be compatible with the con-
tinued existence of ihe kartells. One wDuld expect the emergence
of large independent imits as in the British industry, which might
or might not co-operate afteryards cither in fornial or informal
combinations. The particulars given by Herr Singer as to the
Gelsenkirchnei* Bergwerk and other large concerns will be found
very interesting.

The thor is very decided in his views on kartells and trusts.
“While in America monopolist tendencies are remojselessly^perse-
cuted in a manner and by means ^hich one cannot suppose to
havf 4 .brought special advantages to the community, Germany pro-
ceeds always more and more on the road to become the land eff
monopoly.” He is very severe on President Wilson and the
Democratic Party for their supposed plans to dissolve the trusts
and restore free competition, and considers that a reaction from
those views will ultimately lead to the victory of Mr. Roosevelt
with his policy of toleration of the trusts so far as they are not
monopolist. On the apparent antithesis that we must have either
free competition or socialism, he observed that it is ^ noteworthy
that in America, where till a little while ago the view prevailed
that that was the best Government w^hich meddled least, the
cry for nationalisation grows ever stronger. He does not support,
however, Mr. Gary’s proposal for State-controlled prices, and
adds : “ The mechanism of price-fixing requires some reform in
cases where free competition is no longer efficient •because too
glCpat a part of the production is unSer monopolist control. In
place of a legal fixing of prices, which would give them the
character of a tribute, prices should be regulated in such cases
by common agreements between producers and consumers who
work up monopolised material, both sections being organised for
this purpose. Perhaps such an establishment of prices might

s s fl

598 THE ECONOMIC JOUENAI. (l>EC.

wibke place with the co-operation of a non-partisan board, or
possibly a Government department. Where consumption is much
divided, and especially where monopolised goods are eold to the
public at large, prices should be controlled by a body •of this
description.” This concession on the part of so whdie-hearted a
defender of American industry is of no slight importance.

The whole of the third part o^ Herr Singdt’s book is well
worth reading, despite not a few repetitions. He considers it
“ridicTilous” to speak of the necessity of tarifiP-protection foV the*
German steel industry, but he is not favourably disposed t8
reduction of the American 'tariff on the ground that it .would
make American industry much more dependent than heretofore
on the world market. His opinions of the German captains of
industry are not flattering ; their most respectable endeavour is
to get into the old ruling class of the military and feudal aristo-
cracy, and to use their joint polityal power in defence of their
‘Own interests. He concludes that the aim of a modern democracy
should be “to incretise as far as possible the shaie of labour in
the national production, and further to give an ever-growing
number of the population a share in the produce of capital as
well a»in the produce of their own labour.” Altogether the book
will repay reading, even if tBe vigour of the language evokes as
much opposition as approval.

Henry W. Maceosty

Ergebnisse der bisherigen Versuche kommunaler Flcisckversor-
gung in den grdsseren deutschen Stddten. By Professor
Dr. Silbergleit. (Berlin ; Puttkammer and Mlihlbrecht.
1^13. Pp. 43.)

This iij ^resting liftle pamphlet is the work of the Director
of the Statistical Office of Berlin. It is an ini^estigation into the
results of attempts made from August, 1912, to April, 1913, by
a number of the larger German cities to proyide their own meat
supply. The author show's by means of some useful statistical
tables printed at the end of the pamphlet that the price of meat
pf all kinds ^has been rising^ though with numerous fluctuations,
from early in the nineteenth century down to the present date.^
But since 1900 the rise has been continuous and of unprecedented
severity.

There was an average rise of over 40 per cent, in the price of
the four chief kinds of meat betw'een 1900^ and 1912, which is a
yearly nse of 3*3 per cent. ; but by far the greatest individual rise

1913] SILBBBOLBIT : KOMMUNALBR PLBISOHVEBSORGUNG. 599

was in the last year of this period, when the rise in price over the
preceding year, 1911, was 7’^ per cent. Professor Silbergleit
estimates that the German people paid 226,000,000 marks more
for the meat they consumed in 1912 than they had paid in the
previous year. The special cause of this sudden leap upwards in
1912 was the drought of 1911, and a serious outbreak of cattle
epidemics which ravaged a great part of Germany. The meat
famine — Fleischnot, as it was commonly called — was suddenly
•intensified, and considerable distress was caused - to a large
portion of the poorer classes of thfe population.

A formidable agitation arose all over the country, but especially
in the big towns, in favour of immediate measures of relief. The
most certain and the simplest remedy was, of course, to lower
the duties on all meat imported into Germany. But the influence
of the Agrarian party is still so strong that this plan, tBough
vigorously supported by the Social Democrats and the rapidly
growing number of opponents of Agrarian protection, had to be
dismissed as ^impracticable. The measure which was actually
adopted was characteristically German.

In the autumn of 1912 a law was passed by the Reichstag
granting reductions of duty on imported meat on condition that
the meat should only be bought j;)y a municipaiity for*its own
account and should be sold without profit, cither directly or
thfbugh ordinary sellers of meat , at prices fixed by the municipal
authority itself.

Now the main market on which large supplies of meat were
then available was •the Argentine, and Section 12 of the Meat
Inspection Law forbade the importation oi uozen carcases unless
they contained a large portion of the entrails of the animal. This
provision made it impossible for meat to be imported from the
Argentine and Australia, as it could not^be properly preserved in
that condition. Although great endeavours were lUc de to secure
the repeal of this Section they proved quite unavailing, with the
result that the only markets from which really large supplies of
meat could be obtained were excluded from the operation of the
measure, the scope of w^hich was accordingly reduced very con-
siderably. Nevertheless, the German cities at once started to
avail themselves of the provisions oi the jiew Act. ^Out of sixty-
two cities of over 75,000 inhabitants, all except two took in hand
the municipal provision of meat from foreign sources. Both live
cattle and slaughteied mdat w^ere imported, the former being only
allowed to be drawn from Holland. With the notable exception
of Berlin, which brought all its great quantity of meat from Russia,

600

THE ECONOMIC JOUBNAL

[dec.

^he majority of the cities imported their meat from Holland.
In all, from autumn, 1912, to March, 1913, 9,901 head of cattle
and 13,862,901 kilogrammes of meat were imported by^th^ various
German cities.

When we come to the most interesting part of the whole
inquiry, namely, the effect on meat prices in the dif^rent cities,
Professor Silbergleit gives us no very definite information. He
states that the majority of the cities are of opinion that the extra
supply has -tended slightly to lower prices, or at least to pricvent
them from rising as high as thfey would otherwise have risen. On
th#»^other hand, many cities*^ deny altogether that there has been
any downward influence pn meat prices, though it would appear
that in theses cases ^fche amount imported has been so small as to
form an insignificant proportion of the total quantity consumed.
The Value of the pamphlet would have been^greater if more space
had been devoted to the question of price, and if the results had
been discussed *in some detail in the case of one or two of the
cities. • , ^

At the beginning of April, 1913, the importation of foreign
meat was only continued in twenty-one out of the original sixty
cities, and of these several were then on the point of discontinuing
it. Th*e main Cause of this api)ears to have been the rise in price
of meat in Holland, w^hich no longer made it worth while bringing
it^into Germany. Also, as the hot weather approached, the lack
of cold storage on German railways made the carriage of meat for
long distances less feasible.

Several cities have planned special measures for the future,
such as entering in to^ long-period contracts with agricultural co-
operative societies for the purchase of pigs, or the erection of
municipal establishments for the breeding and fattening qj pigs.

Although the wTiter^ commends very heartily the manner in
which the german cities ^have fulfilled the novel and difficult
duties laid on them by the Reichstag, he is very rightly of opinion
that other and far more appropriate measures might have been
taken to remedy the deficiency in the meat supply.

He quotes with approval the conclusion of file German Muni-
cipal Diet (Stadtetag) : “That it cannot be regarded as the func-
tion of German muni(;ipal authorities to interfere permanently
with the course of food prices and to compensate by means ot
communal measures for a faulty commercial policy.”

The whole story is an excellent comment on the breakdown
of Germany’s attempt to produce all her meat supply within her
own borders ; perhaps it has contributed more th^n anything else

1913] CLEVELAND AND POWELL: RAILBOAD FINANCE ,601

in recent years to strengthen the Social Democratic Party in its
struggle against the Agrarian end Clerical predominance in the
Reichstag.

® C. W. Guillebaud

Ruilroad Finance. By F. A. Cleveland, Ph.D., LL.D., and

P. W. Powell, M.A.^ (New York: Appleton.* 1913.

Pp. 463. Price 10s. 6d. net.)

‘In the preface Mr. Cleveland writes that the purpose ef this
volume is to describe the methods of financing railroads in the
United States. The book seems to have outrun the purpdse.
There are few aspects of railway finance whjch aie not touched
on. Financial aspects of operation forms the heading of one
chapter ; whilst another is largely devoted to financial considera-
tions in maintenance. In fact, the book might be described as
a general review of railroad Qnance, vfere it not Soy the absence
of an adequate consideration of the effect of Wall Street mani-
pulation of ra-dway securities.

It is impossible to follow the authors through all the changes
in railwa^ financial methods in the United States. They make
it quite clear, however, that common honesty has not«been a
strong feature. At the same tinfe, they make out a case in
sov^jral instances for adopting the view that inadequate accounts
and statistics were the real causes of many failures, which have
been commonly attributed to fraud. At the present time such a
claim would be in^possible. With the standard forms of accounts
and statistics insisted on by the Interstate Commerce Commis-
sion, ignorance of the position of a rail way ^property could not be
pleaded by those in control unless there had been frauds in the
accounts' preparation. *

The difficulty of adequate State contn-ol of rail v ay finances,
so long as the control is divided between the Sta'^es and the
Federal Government, is clearly brought out. This is a difficulty
which crops up at all stages in the relations of the railways wuth
the United States Government. There are signs, however, that
the difficulty is likely to be overcome in the near future. The
business sense of the American people is too wise to^llow^ railway
f^nterpris® to be hampered much * longer by this division of
authority. Railway men long ago realised that Federal control
was the only practical form of control, and recent decisions on
rate questions have made the truth of this so clear that it is im-
possible to believe that a way will not be found out of the
impasse.

602

THE ECONOMIC JOUBNAL

[UEC.

One of the most interesting parts of the book is devoted to
the question of depreciation and depreciation funds. It is ques-
tionable whether there are a dozen railways in the which

know exactly how they stand in this matter. In this country our
railways work on no fixed principle. One railw'&y will build
nearly all new locomotives out of revenue ; another will relay its
road with heavier rails entirely tout of revenue. The sums
charged to revenue account when station bttildings are renewed
on a niore generous scale than before wijl be a variable depending
on the state of the company’s finances at the moment and the
piK^ctice of the individual liw3. In India on the G-overnment rail-
ways fixed percentages are prescfibed for ^‘depreciation which
in some caces ar^ more than adequate, and in others wholly
inadequate, to meet the depreciation which actually takes place.
In t*his book it is urged that rule of thumb apd haphazard methods
ought to give way to scientific calculation of depreciation. The
claim seems so obvious that one is* amazed that in the twentieth
century it shouFd n^eet with any opposition. The, authors are so
much impressed with the defects in this matter of the United
States and with the better statutes of Great Britain that they do
bare justice to the accounts of Ameiican railways, and certainly
rate tlTose of British railways too highly.

In the matter of editing the book leaves something to be
desired. For instance, on p. T2 a table giving relati\c values of
wheat and corn after carriage over varying distances by railroad
and ordinary road is given. The table shows that the values are
per ton, but it is only from the succeeding paragraph that the
reader learns that thg values are quoted in “debars.*’ On p. 47
examples are quoted of shareholders being allowed to take up new
capitai at jw as instances of “privileged subscriptions.” The
current market prices o/ the stocks are not given, and Mr. Cleve-
land leave^the reader to infer that such prices^ were above par.

It would be an omission to conclude without a reference to
the bibliography given in chapter xviii. Th^s occupies no less
than 77 pages, and will be invaluable to any future student of
the subject.

W. Tetlrv Stephenson

The San Francisco Relief Survey, By Charles O’Connor,
Francis H. McLean, Helen Swett Artieda, James
Marvin Motley, Jessica Petxqtto and Mary Egberts
C ooLiDGE. York: Survey Association Inc. *1913.
Pp. XXV H" 483. p3?ipe $3.50.)

To the old world the earthquake of San Francisco seemed
one of tlK»se dramatic incidents wLich it is accustomed to associate

1913] THE SAN FBANCISCO RELIEF SURVEY 603

with the United States of America —Nature’s destructive forces
working on her* grandest scale, and the apparently almost
instantaneous recuperation of a people of marvellous energy and
resource. The San Francisco Relief Survey tells this thrilling
tale in very isober fashion ; the writers seem anxiouS to make no
appeal to the imagination. Six competent investigators, three of
whom were in the forefront of the relief operations, compiled the
volume, the main ooject of which is to serve as a guide to social
tvoi^kers in any case of, similar emergency. The six separate
suudies when completed proved too voluminous for publication,
and the work actually brought out is condensation of the origmal
material. By the process <»f condensation the boo’: has suffered
in readableness, and the joint aiiiliorship 'is responsible for
occasional repetitions. The book lemains, nevertheless, a record
of exceptional interesf, and a mine of information for the social
student.

On Wednesday, April 18th* 1906, at 5.12 a.m.,*the city experi-
enced an eart) fjuake shock of about one minute* s duration. In
an incredibly short time, 28,188 buildings had been destroyed by
fire ; 200,000 c :t of a total population of 450,000 were homeless ;
water, light, and drainage systems were annihilated. The loss
of real and personal property has been estimated *at 5(X),5u0,000
dollars — the loss of income from unemployment and cessation of
business cannot be estimated at all. The entire population hai^
been brought down to the bread line.

At 6.45 a.m. the, Mayor took command, and the federal troops
which had been summoned were placed at his disposal. His first
order was to shoot, not arrest, looters; tht second, to close all
places that sold liquor. A Citizen Committee was nominated,
and various sub-committees, most of which proved useless^, were
formed. The main work of relief w^as entrusted to ^he Finance
Committee, which^co-operated with tie American Cross and
the army. •

The immediate needs of the population were food and shelter,
and with the problom of providing these the relief organisation
appears to have dealt wdth remarkable success. There was an
abundance of supplies and no excessive hardship, but; considerable
confusion ^was introduced by the irrte^vention of unauthorised,
•self -constituted committees, which took it upon themselves to
impress goods and vehicles, and to distribute supplies. The distii-
butiorj of clothes w^as not quite so urgent, and apparently pre-
senteii no difficulties. In the matter of shelter the interference of
unofficial commif.tees,*who built barracks in haste and repented at
leisure, again copfused the issues and led to overlapping, twenty-

604 ' THE ECONOMIC JOUBNAL [DEC.

one official 'feamps, first under military control, and after August
Ist, 1906, under the ‘'Department of Camps and Warehouses,''
gave shelter to numbers that ranged from a maximum of 17,592
in June, 1907, to 948 in June, 1908. Tents were supplied ^ree of*^
charge for the first seven months; later, wooden cottages were
put up at a nominal rental ; and finally, the occupiers were
allowed, under definite condition^, to remove tthese cottages, of
which they then became the owners. ^

\yhen*the emergencies of the moment had been dealt with,
the authorities were faced with the most difficult task of all — that

rehabilitation. Under tit? directioiicof the Eehabilitation Com-
mittee the associated charities organised, id each of the seven
civil sectioTJs of the city, a committee of ]:)ersons who had some
knowledge of the district and had already been engaged in philan-
thropic w^ork there. These committees applied themselves to the
task of grappling with the requests for help that poured in upon
them, investigating the stories predated, the schemes for business
or housing projfose(J by the applicants, and judginn on the merits
of the case. Between July 7ih and August 1st, 1906, the Central
Committee passed 3,000 aj)plications, while 9,000 more were
awaiting action. In October a radical change of method was
made : the secffcion offices w'cre closed, and all the work was taken
over by a Central Committee, with eight sub-commit fcees to deal
j\ith special branches of the wmrk.

In the matter of housing the chief difliciilty was that of
securing comi3etent contractors and plumbers. The best results
were obtained by encouraging men to build, or superintend the
building of, their o\^jn houses. On the whole the help given was
effective, and reached the people who were best fitted to make
use of it.

Of the^22,110 grants made by the Eehabilitation Committee,
4,888 wer/ designed to enable the applicants tp make a fresh start
in business. Of these applicants 894 w’^ere re-visited later by the
survey workers, to ascertain wffiat success had attended their
efforts. It was found that 683 had actually started in the proposed
business, and of these 543 w^ere found to be stili carrying on the
business in,, 1908. In some cases failure was attributed to the*
insufficiency of the capital granted. “The Committee,” says the
writer of this section, “seldom erred on the side of generosity.”
In other cases the help came too late ; in others, again, there was
insufficient supervision.

The compilers of the survey found their work, much increased
in difficulty, and their conclusions diminished^ in value, by the

1913] wioksell: voElesungbn. W5

insufficiency of the records kept. Hence their nK)st emphatic
recommendations to relief workers at all stages is : more record
of details^ ir^pre tabulation, and, first and last, more careful regis-
tration! , The lessons to be learnt from San Francisco stand out
in the clearest terms. There must, in a time of disaster, be only
one committee or corpora, tion, and no division of responsibility
for distribution. -Nor should the- donors. of money or supplies
impose restrictions— only those on the spot can judge the real

need. ^The San Franciscan authorities were embarrassed with

• #

vaejt stores of potatoes, condensed ftiilk, and flour, which they
could not use and were not allowed #to sell. There must be •a'
strict audit of all ca.'^h contributions. There should be a bureau
of special relief during the rehabilitation period to meet emer-
gencies, as the ord nary machinery is necessarily slow’ -going.
There should be no rigid limit fixed to the size of grants, and* all
grants should, as far as possible, be followed up by a close super-
vision of plans and expenditure. Finally, it is suggested that the
American Red ^ross, with its existing machinery and organisa-
tion, should be recognised as the national agency for all disaster
funds.

H. Eeinherz

Vorhmingen iiher Nationalokonomie auf Grundlage des Mar-
ginal prinzipes. By Professor Knot Wicksell. (Jena!
1913. Pp 290.)

This substantial vfilume, which has been t^’anslated from the
Hwedish under the author’s supervision, cons^ itutes the first half
ot a work, shortly to be completed, on general economic theory.
It is divided into four sections, dealing respectively witii (1)
population, (2) value, (3) production and distribution., and (4)
capital ; the discussion of money and credit being left o’-^er for the
second volume. The work, as its title suggests, finds its root-
principles in the writings of Jevons and Walras. In general
character it is a critical exposition rather than an independent
^contribution to learning. The author is familiar with the writings
of Marshall, Pareto, and B5bm-Bawerk, as well as*wnth those
of ^the “classical economists.” In hiS chapter on “Population”
he suggests, as a problem, to determine under given conditions
the best number of persons for the welfare of a country, and he^
maintains that, among civilised nations in general, population is
increasing more rapidly than is desirable. The somewhat
laborious character ofHhe exposition, coupled with the general

606 THE ECONOMIC JOUBNAL [DEC.

familiarity of the ground covered, makes it unlikely that this^new
text-book will find many English readers — unless, indeed, an
English as well as a German translation is produced.

a/ C! Rgou ^

Das V ersicherungswesen. By Dr. Alfred I^anes, (Leipzig :

Teubner. 1913. Pp. xiv + 485.) r

The publication of a second edition of this book is irfdioatiVe
of the degree of attention wdiich of late years has been bestowed
Itn Germany upon the sciehtific study of insurance. In England
there is as yet no literature of the subject®; in Germany one is
rapidly growing up. And there is the further distinction between
thf two countries, that whereas the little which has been written
here has been written for the most part by members of the insur-
ance profession, wdio have frequently failed to combine with their
intimate knowledge ‘of business methods an economic or historical
aptitude, and msue*ance problems have been wlu^lly neglected by
the recognised economists, in Germany much serious work on the
subject has been done by students wdio have no connection with
the lousiness of insurance, and the economists have begun to
include it wiftiin the scope their study. The change that has
taken place in their attitude is w’ell illustrated^ by a comparison
•of the earlier wdth the more recent editions of Koscher^s System
der Volkswirthsrhaft. In the older editions insurance is dealt with
merely as incidental to some particular subject under considera-
tion, wdiilst in the new^er editions there appears for the first tiiije
a comprehensive survey of insurance in general.

These German writers have unquestionably done a great
sorvite for insurance. To replace the old view of it as a system
of routin6%a-nd commercial procedure they have urged the need for
a higher 4 !onception — the*need to consider it^ nature and objects ;
to assign it a place in the social system ; to bring it, in other
words, into focus with the general body cf economic leaching.
Dr. Manes has done more perhaps than any other wTiter. He
combines a sure grasp of technical detail wuih a capacity^ for
scientific treatment, and his position as editor of the journal of
the Verein filr V ersiaheruitgswissenschaft ensures faiqiliarity with
contemporary development. ‘ ^

• This second edition upon casual inspection appears to be
simply a reprint of the first. The summary of contents presents a
practically unaltered arrangement of headings and sections. To
judge thus superficially, however, would* be ^riously to under-

1913] manes: das vebsichebungswesen 607

estimate the merit of the new edition. Since 1905 important
thmgs have been happening in the insurance world, particularly
in' respect^ to* the attitude of Governments. These changes have
t)roughC with them, of necessity, changes in the organisation and
conduct of the business.^ Moreover, not only has th(3 use of the
better known forms of insurance been steadily increasing, but the
.principle of insuratice has beei> constantly finding fresh applica-
tions, and these extensions and new applications have meant
aitoendment and developn.ent of the statistical materiahin 'v^ich
the book is rich. That Dr. Manes Ras not shirked his responsi-
bilities in these respects is all the moBe worthy of praise because^,’
with the exception of Workmen’s Compensation Insurance,
‘insurance Mathematics, and Insurance Law (which a^re expressly
excluded from its s^jpe), the study covers practically the whole
ground, and does not cejnfine itself to conditions in Germany only.
It is not merely that facts and figures have been brotight up to
dale, however; the new problAns that time has produced have
been faced and considered. That the bulk o]‘ the volume is so
little altered is accounted for by the fact that it has been possible
to omit sectior ’ of material which since the date of the first
edition have become efasily available elsewhere.

Space may perhaps be taken to nM'.nlion one of the most inter-
esting of the developments of recent years — and one to which the
author gives due attention — namely, the increase in Germany o£
what may be called insurance instruction. With the movement
are bound up in particular three events, all of which took place
before the issue of the •first edition, but all of w^nch have exercised
a great influence since. They are the f(>::*.uY ig Insurance

Seminar at Gottingen University in 1895; the rise of the Han-
delshochsghulen at the end of the ’nineties ; and the fornaation
in Berlin of the Dcutscher Verein fiir Ver^ichcrungsuvsseuschaft
in 1899; to which reference has already been made. The example
of Gottingen has been followed within the last few years by several
other universities, as well as by the Handelshochschulen, and not
only ai;e there now r3cognised courses of lectures dealing wdth the
various sides of the subject — economic, statistical, legal, and
‘ mathematigal — but examinations are held and c^iplomas are
awarded. ^ •

• * The book presents a rather stodgy appearance hardly attractive
to the eye, but possibly that is considered necessary in a series
of handbooks of trade and industry. Nor is the manner of treat-

^ Cf., for example, the new German an<l Swiss legislation relative to insurance
contracts. *

THE ECONOMIC JOURNAL

608

[dec.

ment always ill revolt against outward appearances. But it would
be ungracious to lay undue stress upon these minor defects.
Certainly there is yet to be written a book on the EMjbject which
can compare with this work of Dr. Manes.

A. Fin^land Jack

Theorie und Methoden der Statistik, Ein^ Lehr-und Lesebuch
^ur Studierende und Praktiker, By Al. Kawi^nn.
(Tubingen: J. C. B. Mohr. lO'lS. Pp. xii + 540. F]*sce
16 marks.)

This systematic treatise, by ar Eussian'' professor, has been
translated iAto German with some modifications to meet the needs
of /German students. It is to be welcomed, as making pore
accessible to other countries knowledge of the lines on which
statistical ideas are developing in Eussia ; it is to be wished that
we could also have a translation of Prof. Tchuprow's text-book.
The author draws this inspiration from Eussianr German, and
English writers, and his method in many sections is to collate
lengthy quotations from any of the half-dozen authors he favours
and aijjudge praise or blame; this is interesting enough to the
student of statistical thouglft and informing as to the general
trend of opinion, but the result is a more than (German pro^xity.
In this bulky volume only a small part of statistical theory and
practice is covered. Within his self-assigned limits the author
shows great knowledge, intimate understanding of even the more
delicate processes of measurement, and a sound judgment except'
where mathernaticah methods are concerned. In- his first part,
which is consecrated to theory, statistics is limited to mass-
obserV^dtions of human affairs. The foundation of the Science is
the Law o^ Great Numbers, wdiich is closely related to the mathe-
matical theory of probabitity. The treatmeKt of this law is. a
little irritating, for the author contents himself with unproved
mathematical theorems, and is apparently ignorant of Professor
Edgewwth’s (Germanised as Edgewort) fund/imental treatment.
As so often happens, one finds rather loose references to the use
of a modulus for measuring the stability of numbers, but no
consideration of the pfbssible relation of the modulusr to a fre-
quency curve which would exhibit the probability of variations*
Oi different amounts from the stable position. The author can
think clearly and write lucidly, and in the space devoted to the
nature of great numbers it would have been possible for him to
show in some detail the line of argument which ^^connects mathe-

1913] hirst: the six panics, and other essays 609'

matirfal hypotheses with the movements of numbers arising from
mass-observations.*

. Though the subject is based on mathematical theory in the
^first pSirt^, it is all thrown over and the exposition is for the
entirely non-mathematical reader in the second ; the few formulae
given are explained so slightly as to be nearly useless. By this
self-denying ordinance, the author cuts out a great many methods
(measurement of precision, probable efi'ect of errora, use of the
correla/fcion-coefificient) th:5t ought to be known by the students and
practical statisticians for whom he Writes. It is a serious misfor-
tune, that, at the very time when in England, France, and Norway'
(to name only throe countries) very successful applications of
mathematical statistical theorems are made in quite .simple ways
to practical probler^s, in such an important book as this they
should be relegated to the specialist and their utility unden afed,
and that eminent German statisticians sliould be quoted as
supporting these views.

The main r erit of the treatment is to be foimtl in the careful
and systematic discussion of the elementary processes of accumu-
lating and word ing up official statistics. If there is little that is
original, there is stiil much that is illuminating. The inner
significance of processes and the exuct connotation of terfhs are
subjected to searching analysis. Everyone who has the patience
to read through the latter half of the book will find that he has
absorbed a good many useful ideas.

A. L. Bowley

The Six Panics) and other Essays, By F. Vv . Hirst. (London :

Methuen and Co. 1913. Pp. vi-f271. Price Ss. Gd. net.)

• •

The six panics which Mr. Hirst describes and dircusses are
not commercial panics, but war scares. The first three are the
panics of 1847-1848, 1851-1853, and 1859-1861, made famous
by Cobden’s “scathing exposure’* of them in his Three Panics,
Mr. Hirst’s fourth |^anic, the one for wdiich the late Mr. W. T.
St^ad was largely responsible, took place in 1884, and is now
probably the least well-remembered of the six. “Jit was,” as
Mr. Hirst ^ says, “not much more than a professional agitation
lor taxpayers’ money which died down as soon as something was
forthcoming” (pp. 46, 47) ; but it is important, he thinks, becaus®
“although the results were small in comparison with later per-
formances, the year 1884” marks “the beginning of a most
disastrous expansion in naval armaments, in which the provoca-

610

THE ECONOMIC JOUBnA

[DEO.

tive impulse has too often been furnished by Great Briftfin”'
(p. 42)~a beginning which led on to what is described as “a
most disgraceful chapter in the history of British policy (p. 58),-
viz., the “appalling outburst of naval extravagance^' of tlTe ten^
years following 1893. o

What the author describes as the “ Dreadnought Panic of
1909 is still comparatively fresh ^n the public mind, and it is
natural that more space should be devoted" to this than to the
other panics. This chapter contains copious quotations fr^m tha
speeches in the House of Commons in the debates on the
i^stirnates of March, 1909, and muqh forcible criticism o£ the
Dreadnought policy, particularly of its development at that time
— criticism jvhich,. as Mr. Hirst says, has been offered over and
over again. It is, however, we think, important that both the
facts and the criticism should be placed before the public ^nce
more,^and we* are glad that Mr. Hirst has undertaken the task.
An alarm is dften remembered long after the fact that it was
groundless has been forgotten. It is well, e.fif., that we should be
reminded that in 1909 Mr. McKenna “admitted it to be possible
for Germany to have twenty -one Dreadnoughts on April 1st,
1912 “ ; while Mr. Balfour “believed she might have twenty-five "
(p. 79^ ; wheneas, as a matter of fact, “when the date arrived
Germany had nine ! “ (p. 79, note).

^ The sixth is the Airship Panic of the present year.

Mr. Hirst has a good deal to say on the causes of these panics,
and we gather that he would probably agr(?e with the Bocialisl
who said that peace would be possible only when it became im«
profitable to produce the instruments of war. The object of the
book, as its author lells us in his preface, is “not so much to
preveijt the recurrence of false alarms in the sensation^al press —
for no reasonable maq can hope to do that — as to prevent the
abominable waste of public money in which^a successful panic
always encJs. It is all-important that the governing classes and
the leading statesmen, who are trustees for the nation and for
the public funds, should feel ashamed of the hoax which h|ts now
been practised upon them so often” (p. v)." The modest hope
expressed by Mr, Hirst that he may have supplied them with a ’
defensive armour against <the arrows of future panic-mongers
should be realised if the book receives the attention it deserves'^ --
t Certain portions of the book, the author says, have appeared
in The Ecovomist or elsewhere, but there is nothing to indicate
which these portions are, except in the case of the essay on
Friedrich List and the German Zollverein, the greater part of

1913J GASKEIiL : PROTECXION PAVES THE PATB OP PROSPERITY 611

which formed the introduction to Miss Hirst’s Life of List, We
should imagine, liowever, that the portions previously printed are
ooniained iij, the eleven essays which form the second half of the
' book. , Most of these are of a rather ephemeral character, and
we doubt whether they were all quite worthy of Reproduction.
They range over a considerable variety of subjects, and do not
seem^ to call for any special comment. There is a vigorous plea
for the abolition of the right of capture and prize-money in naval
wa{fa)fe ; a striking pict ure — not at all overdrawn — of-the^disas-
tiiiis results of the Balkan War to the country of the victors and
its inhabitants; essays on John Bright, English newspapers and'^
their authority, foreign travel, &c. The essays which will be of
most interest to readers of The Economic Journal are one
entitled Insular Frc : Trade — Mr. Balfour's Doubts and Anxieties
Resolved, which contains some good criticisms of Mr. Balfour’s
well-known pamphlet, one on private Juxiiry and public waste,
a^id a very attractive little essliy entitled A Flea for Gardens. In
the provision f gardens of one-eighth to one-quarter of an acre
for cottages Mr. Hirst sees “a cure for one of our worst economic
and social evil ^ ) and it is a cure which will add very greatly to
the national wealth. • It will not enrich one class at the expense
of another ; but it will increase the»total product find enlarge the
national divideiid. It will be a source of health and wealth to
tens of thousands of poor families, and it will teach the cliildren
a most valuable kind of knowledge — the knowledge of gardening,
which is the beginning and end of agriculture ” (p. 241).

This second half of the book is rather slight, but it is written
. in a popular style, and the essays are all ve y readable.

H. Sanderson Furniss

Protection Paves the Path of Prosperity : an Exposure of Free
Food Folly hud Fiction. By. Thomas Pen^ Gaskell,
M.Inst.C.E, (London: King and Son. Pp. xii-i-i47.
1913.)

« The author of this book is a thorough-going Protectionist.
Prote^ion is, in his opinion, a better term than T|iriflf Eeform,
agd he whites of “the disastrous poKcy c® ’46” (p. viii). The
'"first six chapters deal in the main with the effect of our Free
Trade policy on British agriculture, and with the benefits whidi
he thinks agriculture in France and Germany has derived from
Protection. Chapters vii., viii., contain the usual comparisons of
the growth of ''•ertaih British industries with those of France,
No. 92.— voTiv xxni t t

612 THE ECONOMIC JOUliNAL [DEC.

■V " ' .

Germany, and the United States, and in Chapters ix., x. the
author pleads for the ordinary remedies advocated by Tariff
Eeformers.

The book contains no new facts or arguments, as was rather^
to be expecfed at this stage of the controversy. ^Many of the
facts which are brought forward, however, though they would
be adniitted by most people, do not really help to establish Mr.
Gaskell’s case, and many of the arguments fie uses are not even
the best ctf the old ones. It was hardjy worth while to ^^eparfe
elaborate tables to prove that the supply of home-grown wBSat
lias fallen off since the introduction of Free Trade in 1846, or to
show that the acreage under the plough and the numbers engaged
in agriculture, as Well as their proportion to the population, have
declined of recent years. Nor was it necessary to occupy so
much space in telling us that some o( Cobden's prophecies
as to the effect of Free Trade on British agriculture have been
falsified.

The author is not quite fair with regard to sojne of the con-
clusions he draws from his facts; e.g,, he points out that the
agricultural population of Germany has declined since 1882, but
this k attributed mainly to the increased use of machinery,
whereas the falling-off in our^own agricultural population he sets
*dowm entirely to Free Trade. ^ ^

' * Mr. Gaskell does not appear quite to understand some of the
most elementary principles of international trade. Here are two
specimens of the kind of statement he makes : —

“At the present time the average excess of wheat importsf
due to the diminishe(3 yield at home, is about 10,000,000 quarters .
a year, and as the present price of imported wheat is about 36s.
a quarter, it may be said that £17,600,000 per annum* is .being
spent abj i^d instead of being allowed to fructify at home in the
shape of wg^ges and profits to our agriculturiste (pp*. 17, 18). .

“The United Kingdom hf&s in its midst to-day the best markets
in the whole world. Ought not the British citizen to have the
first claim on his own markets, and ought •Jjhe foreigner to be*
allowed the use of them without any payment whatever^”
(p. 120). .

In Chapter ix. Mr. ‘Asquith is quoted as saying that.an impqrt
**fiuty on corn, imposed by a country that is obliged to get the'
balk of its, supply from outside its own shores, will raise the
price of the whole supply by at least the amount of the duty. It
is no answer to this to quote from the 1909 Blue Book on British
and Foreign Trade and Industry to show that the price of wheat

618

1913] BBISCO : ECONOMICS OF BUSINESS

/ ' ' ' .

in ^he United States was no higher than in^ England, althongh
there was in the United States an import duty of 8s. 7d.

In shorty, this is a book which will not, w^e think, do much to
‘ help file cause of Protection.

H. Sanderson Fueniss

Economics of Bw/itss, By Norris A.’ Brisco, Ph.D., F.E.H.S.

(New York : Macmillan Company. 1913. Price 6s. 6d. net.)

• • • * .

^It is not a little remarkable that most of the books of a simil^

description to Dr. Norris A. Brisco's^ Economics of Business have
been published in ,fhe United States and written by American
authors. Accordingly, it seems not unreasona*ble to^'suppose that
the ^demand for such literature is greater in the States thap in
this country. This wauld he a gloomy reflection to the Britisher,
if he failed to take into account the% quality, well as th^
quantity, of the literature in question. The truth is that while .
works of this description are unquestionably# of interest to those
who are already well acquainted with their subjects, they are
but a feel le gnidt to the uninitiated. Nor is this altogether sur-
prising, when Dr. Btisco candidly admits that he consi^prs the
most significant of all contributiorfb to this subject to be those
that liave been piade by successful business men recounting their
own experiences. This being his view, it is to be assumed that,
in the w^ork before us, he has given the greatest weight to utter-
ances of this description, and founded upon them the majority of
liis statements and his theories. Yet, surely, it must be obvious
. thaJ very few • successful business men are^a-ble to diagnose the
causes of their success with even approximate accuracy ; or, alter-
natively,* that, however willing they may be to secure an •adver-
tisement for their personalities, they hibour undoi®”"m6“'''t)ver-
whelming anxiety tto “give away” t&c causes of th|;^ir success.
The intelligent observer is often abld to read between the lines
of such utterances, and to gather from them an occasional hint
that may prove suggestive ; but they can hardly be said to con-
stjj^ute the basis of any reliable text-book. All the same, and in
spite of its manifest superficialities, the work before us has at
least the rf^deeming virtue of being emineilHy readable — a quality
'which ^many more weighty volumes can lay no claim to. Accoref**
iiiglyi it may yet justify its existence by demonstrating that it is •
possible to write on such subjects as economics and business
management, and at the same time to be interesting. But the
author’s obvious. lacK of acquaintance with any of the more

Tjri2

614 THB BOONODUC JOCBNAI. [D80.

' #

recently published British works on the same and Idndred
subjects, combined with the fact that he apparently addresses
himself exclusively to American conditions whenever he is at ajl
practical, naturally imposes considerable limitations on the*^tility#
of his work in this country. At the same time, it may be stated
that a distinct demand is growing up here for a text-book, written
in plain non-techhical language, qp. some such lines as the one
before us. We can only regret that, owing to the defects to which
we h|ve drawn attention, it seems both unlikely and undesirable
that Dr. Brisco’s Economics^ of BusindJss should be held to iqeet
Shat demand.

Lawrence E. Dickseb

The Standard Rate in American Trade Unions, By DAVit) A.
McCabe, Ph.D. 1912. Pp. 249. (JTohns Hopkins Univer-
sity Studies in Historical and* Political Science.)

Admission to American Trade Unions, By F. E.^Wolfe, Ph.D.
1912. Pp. 181. (Johns Hopkins University Studies in
Historical and Political Science.)

The Oovernm§nt of American Trade Unions, By Thisodore
W. Glocker, Ph.D. 1913. Pp. 237. (Johns Hopkins
University Studies in Historical and Political Science)

These detailed studies contain a mass ot information with
regard to the methods and objects o^ Arnencan trade unions. Dr.
Glocker has had the most interesting subject to deal with, and
he gives a vivid imprpssion of the problems of trade union govern-
ment. We recognise many features which are familiar in this
country. For instance, in America, as here, there is unending con-
flict* o^iv^en the experienced officials on the one hand, and on
the other ^the stalwarts fvho uphold the “(J^wn tools policy’^
and the literal applicatioir of extreme democratic principles in
every department of trade union administration. The problem
also as to whether the executive board of th« union shall .consist
of the permanent officials, or of members working at their tode,
in different towns, who act as a check on the officials, or whether, ‘
as a third alternative, thfe “governing branch’' plan shall be
^'adopted, has exercised hundreds of American trade union adminis^
trators, in much the same way as in this country. But, ^ on the
other hand, there are some striking differences between the con-
stitutional development of English and American unions.
Decentralisation is much more prevalent in An\erica. (It is, for

1913 ]

AMERICAN TRADE UNIONS

615

instance, noteworthy that the term ‘Mocal union** is constantly
occurring, where,* under English conditions, we should speak of a
branch). It is difficult to decide from Dr. Glocker’s study whether
' the lack of centralisation is due to the large geographical area over
which many^ American unions extend, or to the fact that trade
unionism is Veally still in a more primitive condition in America
than^ in Engiandi Dr. Glock,er himself contrasts the hifetory of
the use of the referendum in American and in English trade
unionism. In America trade unionists are in the forefront of the
V kiespread movement for*the increased application of the referen-
dum to State and municipal politics. The sources of the trad^^
union constitution, «* and ti e relations between Canadian and
American trade unionism, are among the many othor interesting
points with which Dr. Glocker deals.

feoys and women are a source of many burning problerfs in
connection with the right of admission to trade unions in America
as in England. It is well kncfwn that workmen in America pass
much more f isily from one class of work^ to ‘another. It is,
therefore, oniy natural to find that where a more or less formal
apprenticeship. ^ insisted on by American unions, it is often only
required to be of thr»e or four years’ duration, as against the five
or seven which are to be found in ithe rules of s6 many ^Inglish
unions. It is interesting to find that one or twn unions, such as
the eTectricians’ , have develof>ed quite elaborate systems of testinjg
the competency of workmen who apply for admission ; while
others, such as those of the marine engineers, plumber, and
oarbers, recognise arffl supp)ort the system of government certifi-
cates of efficiency, which are established in V ese trades. Questions
as to the admission of negroes and of alien immigrants are con-
stantly «aiising controversies in the unions. It appears to be
common for local unions to refuse to admit negroes, :H the
central authbrities, strive hard to upheld their equal rights. Dr.
Wolfe concludes that the monopolistic “closed union “ is a rare
phenomenon.

The details of .loblems connected with the form of standard
rajies, and particularly piece rates, are very largely the outcome
of almost inevitable circumstances connected with the nature of
various trades. Dr. McCabe does nok givev us a very clear impres-
"sion of the extent to which standard rates really are observed
the various trades. It is true that it is exceedingly difficult \c
do this ; but unless we know it the paper decisions and demands
cJf unions may often give a false impression of the true pravailing
conditions. The study of the area of the standard rate is perhaps

616 THE ECONOMIC JOTTBNAL [DEC.

the most useful part of Dr. McCabe’s book. He notes that Ifche
area of piece rates tends to be much larger than that of tirde rates.
The statistics relating to the attitude of the unions towards piece
and time rates are afeo particularly valuable, and may be*^ usefully
compared with the similar statistics compiled by Mr. and Mrs.
Webb.

P. Keeling
*

Progress and Uniformity in Child-Labor Legislation: a Sthdy. irt
Statistical Measurement' By William P. Ogburn, Ph<D.
(Columbia University Studies in 'History, Economics, and
Public Law, No. 121. 1912.) .

f *

The development of international labour legislation, and the
activity of central governments in every country as “gadflies”
stirring local authorities or subordinate iegislatures to higher
"standards of efficiency, redder the study of the statistical methods
of measuring social ‘progress of directly practical importance.
Anyone who has ma‘de even the slightest attempt to compare the
details of factory legislation in different countries must realise the
extraordinary difficulty of forming comparisons of the real
effectivsness aivJ not merely ^of paper requirements. The same
problem exists in connection with the administration of the
Employment of Children Act in our o.vn country, Dr in connection
x^th the labour laws of the American States, which constitute
such a formidable volume in the editions issued by the American
Bureau of Labor, l^r. Ogburn has certainly, succeeded in vender.^
ing the labour legislation of the United States as a whole nwro
intelligible to the sfladent. His tabular stateihents make it
possible to form some estimate of the rise in the standard of
regu lation throughout the country ; and his methods are worthy
of study by anyone who is ^endeavouring to record the action of a
large number of local authorities or different governments in
dealing with a given problem.

P. Keeling

The Naval Mutinies of 1797. By Conead Gill, M.A. (Mali-
chester University, Press. Price 10s, ^d. 1913.)

> • • • ^ |n

• Aeaet from its historical value, this book has some gpecial*
*iutere8t for economists in the curious similarity of the 1797
mutinies to modern industrial strikes.

The're were numerous causes through which a spirit of rebellion
was fostered in the Navy and brought to a? head at the close of

1913] GILIi : THB NAVAlj MUTINIES OP 1797 617

year 1796. But the most important Mr, Gill shows to have
been economic. Since the time of the Protectorate, the naval
pay-schednle had not been changed. On the other hand, the cost
of living^ihad risen in that period by at least gne-third. Moreover,
the rations of food supplied were of wretched quality, while even
frpm them,»such as they were, there was much “ leakage,’’ as
well as from the^ medical stores and other issues intended for the
comfort of the men^ Thus tBe sailors had a very real grievance ;
and their resentment against such treatment was aggravated by
tln^ fact that two years ipreviously^ while they were* neglected,
thi Army pay had been substantially increased ; so that they,
imagined, not without reason, that*the oflBcials at the Admiralty
were both ignorant and carele&s of their condition. They resolved,
therefore, to take the remedy into their own hands, and the
method adopted was to refuse to weigh anchor until the pay, of a
seaman should be augmented to about a quarter as muqb again
as it then was and their othqr grievances redressed ; finally, thxT’
King’s pardon was demanded for all concerned.

Of the two mutinies, the first, at Spithead, was quickly
successful ; the Nore mutiny which followed was protracted and
ended iu an* inglorious surrender. The Spithead mutineers dis-
played remarkable efficiency throughout. There was, qf course,
no time or means to form a trade* union organisation. But this
difficulty was solved in a simple way by taking over the naval
organisation as it stood, some of the ofticers even (w^ho showd
surprising wisdom in a difficult position) being retained at their
^duties, and only those sent on shore who were particularly
detested by the crews. Supreme command devolved upon a
council of delegates chosen for the whole#deet, and upon special
committees for the various units. Obedience to their orders w^as
absolute, and the daily routine continued as usual. MeSinwhile,
the delegates bargained with the Admiralty. No doubt tneiV con-
tentions gained fcfrce from the fact that French and Dutch expedi-
tions were maturing at Brest and the Texel ; otherwise they must
easily have been starved into submission as were the Nore
mutineers in the •sequel. But the threat of hostilities and the
justice of their demands gave the mutiny the support of public
opinion, and Pitt’|||jGovernment, after some haggling, not un-
willingly conceded what was askecf. Sfiortly afterwards dissen-
sion!, again broke out in the Channel fleet owing to a suspicidh,
not uncommon in trade unions to-day, of Government gbad
. faith. As soon as the new changes were embodied in an Act of
Parliament, however, the seamen returned to duty well-satisfied.

618

THE ECONOMIC JOUBNAIi

[dec. 1913

The mutiny at the Nore was no more than an imitation* of
Spithead. But in this case personal ambition drove the leaders
on to make more and more preposterous demands, which S 009
alienated the sympathy not only of the public but of their own
supporters as well. By adopting a firm attitude an^ cutting off
supplies the Admiralty succeeded in forcing an unconditional
surrender.

The Spithead mutiny was in every way a, model strike. ‘Vio-
lence was avoided under the strong rule of the delegates, aqd the
latter tvorked harmoniously because they worked only for*tlleir*
^lectors’ interests. To take their own words from a dignified
communication to the Admiralty, “We know- when to cease to
ask as well as to begin, and we ask nothing but what is moderate
and may be granted without detriment to the nation or injury to
the service.” Clearly the sentence quoted is in the spirit »f a
trade dispute, not of a treasonable revolt. K remained for Parker
"at the Nore, by his self-sfecking iiy^olence, to drive those of his
■ supporters who w;ere deeply implicated into the arms of a foreign
country.

Mr. Gill draws no moral from his account, but it is not im-
possible that in both mutinies there is a warning for the present
day. Imthe British Navy, no doubt, modern methods of discipline
make the fear of a mutiny practically negligible. But in the
event of war a big union of colliers and railwaymen might *\'ery
wfill have a dangerous measure of power, and use it in the fashion
of the 1797 mutineers.

, F. M. HABDWAiN

NOTES AND MEMORANDA

The Construction of Index Numbers to show Changes in
THE Price of ‘the Principal Articles of Food for the
Working Classes.

This paper deals wdth some of the more striking diffioidties
encountered during a leco.nt attempt to obtain a series o; retail
food index-numbers for London. The*Board of Trade, in their
Annual Abstract of Labour Statistics, give eich year index-
numbers of tlfe retail price of the principal*^ articles of food in
London, but +hey unfortunately do not indicate the methods
which they adopt tc^ overcome the difficulties encountered. In
passing, 1 should like to point out that in spite oLthe facf that it
is expressly stated by the Board that these index-numbers are
based*upon returns for London only, they are constantly quoted
as applying to the whole of the United Kingdom. The Board of
Trade have now shown in their Eeport of the Cost of Living
Enquify for 1912 tha4; the increase in retail ])rices between 1905
and" 1912 in the* different towns was surp:<.singly variable; Ihe
extreme range being from 7 per cent, in tlfe case of Portsmouth
to 20 pen cent, in Stockport. ^

The value of index-numbers depends not only upon ^ the
accuracy, brut also upon the number, cf the returr,. ilsed in their
construction. It is therefore a little, Jisconc,erting that year by
year the Board have published in their Abstract of Labour
Statistics the food, index-numbers referred to above, without
stating the numbeff’ of firms making returns to them for this
purpose. In the Keport of their Cost of Living Enquiry for 1912,
however, it is stated»4hat these figiures a^*e based upon a single
•reXiord, namely, upon the only available continuous series of pftrps
reachihg as far back as 1892. ] can quite appreciate the difficulty
experienced in obtaining many continuous returns of prices reach-
ing as far back as this year, but this is surely no reason why the
index-numbers for recent years should also be based upon a

620

THB BCOKOMIO JOtJBNAI*

[dec.

single record. It is only fair to the Board to state that between
1905 and 1912 the general increase in prices, according to these
index-numbers, was practically the same as that shown fqr
London by the two cCost of Living ** Enquiries, for v?hiah leturns*
from a large number of firms were obtained ; but for individual
commodities there was in many cases a marked ^disagreement
between the two results, these differences neutralising one another
on calculation of the final figure. It is, also to be regretted that
in these “Cost of Living” Eeports the Board do not st^jte the
numb\3r of returns upon whii^h the different figures are base^ so
icthat it might be possible to judge of their relative merits.

Index -numbers of retail food prices can be based either upon
weekly or monthly^ records of the prices charged by the retailers
for the principal articles of food, or upon the prices paid by the
consumers, z.c., upon family budgets. Owing to the great
difficulty experienced in obtaining accurate family budgets, and
**1116 enormous labour involved in obtaining a sufficient number to
give reliable information, the first alternative is most certainly to
be preferred. * \

The next point to be determined is whether the prices charged
by firms dealing with working-class ahd middle-class customers
respectwely chjyige in the same in other words, whether we
can use records from both types of firms indiscriminately in deter-
mining the change in the cost of living for the working classes
Without much more data than are at present available it is im-
possible to decide anything definitely on this point ; as a result
of my own investigation, I came to the conclusion that, akhoiigb
for individual commodities the average change in the prices
charged by the two types of films was not the same from year to
year, the general level of retail prices as a whole m the two cases
showed similar variations over the particular period' studied.
Until more definite inlorma^tion is available on this po^nt, it would
probably be wiser to treat separately the retlirns from the two
types of firms. Incidentally, it is much easier to obtain returns
from middle-class firms than from firms dealing with working-
class customers. «

It has already been stated that in order to calculate reliable *
index-numbers for a given commodity, it is necessary to obtain
retfcirns from a number of firms. To illustrate this point I have ^
given in the following table index-numbers for bread obtained
*^from five London firms, three dealing with middle-class and two
with v{orking-class customers. I have selected these from a
number of firms making returns during my recent investigation,

621

1913] IHDBX KVUBBRS OF BBIAIIt FOOD FBICE&

firsUy, because they were able to give me the date and extent of
every change in price which tool: place during the period studied ;
and secondly, because, with the exception of Firm E,^ their trade
•extends l<rito practically every district in London. Firm A has
over 160 branches. Firm B over 100 branches, while Firms C
and D serve customers all over London. I should therefore have
supposed that therindex-numbjrs based upon these returns would
have ‘agreed very closely; but an infection of the table shows
that this is not the catio, even for firms dealing with* the same
cla^s of customer; totake‘a single example, for 1904 the figures
for Firms A and,B are more than J per cent, higher than’ the'
figure for Firm C. Similar divergences were also found for other

Indtx Numbers of the Retail Price of Bread in Lortdon, lOf fi-lSll.
{Average 1900-1911 = 100.)

Year.

Middle Class Firms.

• _

Working Class I’irms.

Firm A.

Firm B.

Firm C.

Firtti D.

Firm E.

•

1900

96*5

1901

95-6

1902

94 *

95*5

JL903

. 95-6

• 98

1904

103

104

95-5

101

1906

. 103

95-6

101

19fi6

100

96‘6

1907

103

1030

96 •

1908

104

1120

107

1909

109

117

1120

110

19m

loK

108

1030

107

102

* 1911

•

100 •

100

99-6

coiiiXt)odities, which suggest that the prices charged by different
to!’ the same commodity do not vary in the same way, and
that to obtain reliable results index-numbers must be obtained
from as many firms as possible, and the mean taken as the final
figure.

In obtaining these final figures the question of weighting the
differtot index-nurrjfbers according to the relative importance of the
ficms in question must be considered, although in practice it is
very difficult to determine the particular weight to be given to any
irdividuai firm. The Board of Trade in* their ‘*Cost of Livmg”
Enquiries, give what they call the predominant price of ciie
different commodities in the various towns. They explain tlia;^
the "predominant price is neither the “minimum*^ nor the
^ The trade of firm B is confined to one district of London, but it is so* extensive
U;i that district that], it fixetf the price of bread for the whole neighbourhood,

THE ECONOMIC JOCBNAL

[dec.

“average price/* but the “price at which most working-dass
people buy.** If ihe Board had selected either the “minimum**
or the “average price’* the matter would have been quite clear;
but as it is we are naturally anxious to know the statistical, method^
employed in arriving at tlie predominant price, a ssubject upon
which the Board of Trade give us no information. 0n the face of
it there appears id be room for Iqo much personal equation for
this predominant price to be a really satisfactory measure. It
may be observed that even if the predominant price could be
accurately determined it is ^possible fhat it might not leadl- to
^really reliable index-miTn})crs being obtained, since the
price at winch most working people buy mayrbe a measure rather
of the s})ending pow('r of Iho wwking classes than of the actual
level of fetail prices. This naturally leads on to the larger
question of whai we really mean by changes in the cost of living.
Are wf simply concerned with changes in the price of food and
renl. as such, hr miivst we make itllowances for changes in the
demands of tlieA\orking classes consequent upon an improved
standard of liviug?’ J^raetically, this point is verj important in
dealing with the question of rent, and^l am not^satisfied that it
is iiniiiiporianl in dealing wilh food ; but a detailed discussion of
it is beyond th« scope of thif paper.

Tlie collection of family budgets is a necessary stage in the
eonsiruetion of food index-numbers in order to*" delermine the
relative importance of, and consecjuently the w'ejglits to be
assigned to, the commodities most commonly consumed by the
working classes. In 1 004 the Board of ^Practe collected aboht two'
thousand such budgets, and have used the results in the calcilla-
lion of their Ketail Po6d Index-Numbers. Fresh series of family
budgets should be periodically collected, as the relative i>-'*mimts
spent on the diffenmt articles, and possibly the articles themselves
may change in the course (fT time.

Clearly, ^ihe kinds of the, different commodities must not, as
a rule, be changed during the course of an investigation; for
example, Devonshire l)u tier one year must not be compare4 with
Australian butter the next, but it does not \iecessarily follow,
even if tliis is the case, that the actual quality of the kinds studmd
wull remain constant. ]\tany examples can be given of changes
liayfAg taken jdace in the quality of what is, to all infants arfd
purposes, the same kind of article from the consumer’s point of
\iew. For instance, during the past twelve years, owing to more
scien(ifi(<^ methods of thawing and freezing, the quality of *the*
foreign mutton sold in this country has steadily improved ; while,

1913] INDEX NUMBERS OR REDAIL FOOD PRICES 623

on>tkhe other hand, that of foreign beef has gone down, owing to
the fact that the supply from North America has practically
oeased, and its place has been taken by a j)oorer quality coming
ifrom Argentine. Since we. are solely •concerned with any
changes that may have taken place in the price that the working
woman has to pay for the necessary articles of food, we can ignore
the more subtle differences in (]unlity. If, how^ever, the change in
quality is sulSciently marked to force the hoiisewiFe to substitute
pne kind for another, then we must make a similar substitution
in calculating our index-mimbers, and change from kind to kind,
notwithstanding what ha (3 already |)een said. If, on the other*
hand, the change inequality is not sufficiently rnarlced, it does not
seriously affect our problem,' and in this case I should suggest
that the index-n>'mbers need not be modified to show such
cliahges in quality, althougli a note to the effect tluii •t-hey
have taken place might he iiisr^rted. It may be observed that
if we were concerned with lihe change in Ihe price of artieh'K.
equally nutritive and equally palatable, these (Jianges would in ‘
theory have be allowx^d for, although pracrjcally it would be an
extremely difficult matter.

These suggestions of"* methods of dealing with changes in
quality are admittedly quite tenVitive, and tliis sul)j<^t must
receive much more detailed consideration Ixdore leliable index-
nurafeers can b5 obtained.

A special difficulty arises in connection with meat and baco*n,
owing to the fact that the consumer is able to purchase a variety
of different cuts and*joints. In constructing iiuk'x-nunibers must
the change in the price of all joints bo stu ’hhI, oi* can a selection
be paade? It would appear to be unwise th make anything like a
srnal'^ysel action of joints, for ihe following reason : when the
Vvholebale price of meat advances by a small amount, the retailer
need not increase the price of all joints, so he naturally selects for
this purpose the joints for which is most demand. Should
these particular joints be those selected for inquiry, the price of
meat^will appear fp fluctuate too much and vice versd. If, how-
ever, the change fn the average price per lb. of all joints sold is
iTsed instead, the joints, of course, being kept the same during
the investigation, those joints which, frequently fluctuate are com-
b*ined wfth those which tend to remain constant in price, aIT^^*^he
real Change in the price of meat as a whole is more likely tn be
obtained.

• The question of the h\se <o be used in calculating^ index-
numbers must now.be considered. The interpretation put upon

624

THE ECONOMIC JOUBNAL

[dec* 1913

index-numbers, especially by persons not used to dealing with
figures, is often greatly influenced by the base chosen, although
the actual percentage increase or decrease over the whole period,
and from year to year, is quite independent of the b^tse? If
single year is chosen, and if the figures for that yeaivare not very
accurate, all the other index-numbers are, for comparative pur-
poses, affected, and consequently^ when the figi^res are contrasted
with index-numbers prepared by other observers, they may appear
to differ ipore markedly than they do in reality in consequence of
this d'rror. This question has been dealt with by Dr. L.
Box^j'ley,^ Mr. A. W. Flux^^ and oth^ers, and the consensus of
opinion seems <o be that it is better to choose as a base the average
of a number of years as being less "subject to error. I should be
inclined to choose as a base the average of the whole period, so
thatr the index-numbers for the different years simply me^Bure
deviatvms from the mean of the period studied.

In the accompanying diagram «(p. 625) I have plotted three
series of general, index-numbers of retail food prices for London
for the period 1900'-19i0. These general index-t pmbers were
prepared by combining the index-numbers for the separate com-
modities, each commodity being weighfed according to the extent
to which it entqrs into the consumption of the average working-
class family. One series was prepared by the Board of Trade,®
another by Dr. A. L. Bowley,^ and a third by myself.® •

‘ In the first case, the year 1910 has been taken as a base.
According to this diagram, it would appear that while Dr.
Bowley’s index-numbers agree very well with my own for ih^
wdiole period, those prepared by the Board of Trade were too low
from 1900 to .1907. In the second case, I have taken the year
1900 as base, and here it would appear that although again Dr.
Bowley's and my own index-numbers agree very well, the Board
of Trade figures are too hig|,i for the whole period witji the excep-
tion of the .year 1900. In the last diagram fjtie average of the
years 1900 19 JO lias been cliosen, and here the three series of
figures show the best agreement ; from 1901 to 1907 the three
series agree very w^ell indeed, but the Board uf Trade figure for
1900 is too low, while those for 1907-1910 are too high. The
percentage increase over the w^hole period remains unchanged

T^^'lcmenU of Siafistics,

2 “ Modes ol Constructing Index Numbers,” Quarterly Journal of Eednomies^
raG6~1907.

^ Taken from “ Fifteenth Abstract of Lahmr Statistics.”

* Daill/ News, October 9Ui, 1911.

® Journal of the lioyal Stutihtical Society, \ ol. LXXVJI.

<>teiiaBA£^'i!tfiQi&x bx food pbiobs in lioirDOM,

leoo-mo.

I F Wood » Index Numbers,
tf Dr. Bowley a Index Numbeie
III Board of Tixde Index Numbei •

626

THE ECONOMIC JOURNAL

[dec.

whichever base is chosen, except for small errors due to appe-oxi-
rnations, and for the period studied, 1900-1910, amounted to
about 6 per cent, according to Dr. Bowley and myself, and
from 9-10 j^er cent, according, to the Board of Trad:\, ' c
These three diagrams will serve to illustrate «the following
point. When a single year is used as a base and index-numbers
prepared by different observers are compared, the actual year
selected as a base absolutely determines for which years the
different . series of figures shall appear to agree ; ' while®^ if tl\e
average of the whole period ^s taken, h- is possible to say actually
for what years the series d^fi'er, since,^ taking our own particular
case, the index-number for any year, simply' measure the differ-
ence between tbq level of retair prices for that year and the'
average for the whole period studied.

( ^

Table II . — General Index Numbers of the Retail^, Price of Food in London,

‘ « 1900 - 1910 .

Year.

1910 iakefi as^Base
(1910 = 100).

1900 taken as Base
(1900 = 100).

Average 1900-1910
k taken as Base
(AveWge 1900-10= 100).

Dr. Bowley’s
Index Numbers.

P. Wood’s
Index Numbers.

Board of Trade
Index Numbers.'

Dr. BowJ^y's
Index Numbers.

F. Wood’s
Index Numbers.

Board of Trade
Index Numbers.

.r^ ©

F. Wood’s
Index Numbers.

Board of Trade
Index Numbers.

1900

94-5

940

91-0

1000

100*0

97-0

97-8

96-6

1901

95‘5

94-0

93-0

101-0

100-0

102-0

98-0

974)

1902

95-5

960

92-0

101 -0

101-0

102-0

’98^0

98-0

97-0

1903

96-5

95 0

102-0

101-0

103-0

99-0

98-0

99-0

3904

90 5

90-0

95-0

102-0

104-0

99-0

99 : 5 ;

lOQ'O

3905

. 90-5

970

94 0

102-0

103-0

104-0

i 99-0

lOb'O

99-0

1906

96*5

97-0

94-0

102-0

103-0

99-0

100-0

99-0

190*/'

97 '5

90 -0

96-0

103-0

102-0

106-0

! 100-0

100-0

101-0

1908

99*5

98-5

99-0

1050

104-5

108 0 ^

102-0 *•

102-0

104-0

1909

99-5 <•

990

98-5

105-0

105-6

108-0

102-0

103-0

103-6

1910

100-0

‘106-0

106-0

130-0

‘

103-0

106-0

This paper has only touched upon the mok obvious difficulties
encountered in the construction of retail prices index-numbei^s ;
but the whole question needs careful consideration if reliable and
aciiiwato figures arc to be obtained. ^ •

Frances Wood

1918]

THE WOBKINQ OF THE INSUBANCE ACT

627

The Wobking of the Insubance Act.

Report for 1912-13 on the Administration of the National insur-
ance Act, Part I. (Health Insurance). [Cd. 6,907.] 1913.

660 ^>p. Price 28 . 9d.

First Report on the Proceedings of the Board of Trade under
Part II.' of the National Insurance Act, 1911. [Cd. ,6,965.]
1913. 82 p^. Price 9d.* •

, Opinions may differ afe to the merits and probable resnljs of
the Insurance Act, but iis^^taunchesit advocates m.*st have been a'
little surprised av. the comparative ease with which it was brought
into force. A tribute of praise must be paid to those to

whom this achievement is due. There has not been much active
opposition to the Act ; violence has been mostly ol words. * But
the technical difficulties were legion. The baldest stateisitot ^pf
w^hat has been done is eloqffent testimony of tlie work wdiich
must have been accomplished. Only a few years ago there were
practicady indications of compulsory insurance, and he who
would have piophesied its existence on anything like its present
scale would have b%en ignored as a visionary. It was without
precedent in this country, the conditions differing in thffi respect
trom those in Germany, wdicre compulsory insurance already
existed on a considerable scale when Bismarck launched his
schemes. The principle of compulsory deduction from wages \va8
entirely new to a large proportion of the population. A large
propoftion, also, were ignorant of insura oe of any kind. And
no?v practically every wage-earner is insured, compulsory deduc-
tions are made from their wages, empl?)yers contribute auto-
benefits are distributed, and, outwardly at leagt, wdth
few exceptiions, all this is taking place with a smoothness v\hi(*h
might seen> begotten of years of experience.

This facility is due to a large extent to the ingenious
machinery of the Act, w^hich, with liberal baits, called into play
the hot competitive activity of the different societies — friendly,
trade union, and, hot least, industrial.

Vigorous measures were adopted to ^.catter knowledge of the
Act. For a season the Commissioners poured publicity.
•35,000,0d0 leaflets were distributed. It would have be^h an
interesting study to have ascertained to what extent this torrential
activity proved of service.

Foremost among the obstacles to be overcome were^the dis-
agree^aents with the doctors, which, however, were matters for
No. 92.— V0]t4. XXIII. xj V

628

THE ECONOMIC JOtTBNAL

DEC.

the Grovernment rather than for the Commissioners. The Olive
was sufiEiciently well sweetened to attract most of the doctors.
Thus, in England from 80 to 90 per cent, of those in industrfal
practice are on the panels. Jn very few places hjS^S' it beerf
necessary to make exceptional arrangements for general service.

It is interesting that in nearly all places doctorgf’ have adopted
payment by capitation, that is, a (Jefinite sum for eagh person on .
their books. Practically in the Manchcstei^ and SaPord district
alone has payment by attendance been adopted,'^ that •is,^the
division of the amount avaikble amoilg the doctors according to
services rendered. In Kentr where this latter practice was first
adopted, the doctors later gave it up for the capitation system.
Payment according to services rendered calls for higher medical '
organisation than payment by capitation. The experience of .
Ger'many suggests that when the British doctors become more
orgafikicd payment by attendance will be more widely adopted.

It is not possible to do inoreHhan refer briefly to some of
the other important questions with w^hich the Commissioners
have had to deal. As was to be expected, it is wit]5c|he stragglers
of the industrial army, with out-wwkers and wdth casuals, that
some of the principal difficulties have ar/sen. A committee,
presided over by Sir Erne&t Hatch, considered a number of
questions touching out-workers, especially the position of married*
wom^n, and later a very full inquiry was held by Mr. Pope. It
was decided that married women clu^uld not be excluded from
the Act. It was found that in some trades steps had already been
taken to displace single w^omen out-w’^orkor* for married ^?omerf,
on the assumption that the latter w^ould not come .under the Act.

The basis on wdnch contributions should be paid formed
another difficulty wdth out-w'orkers. They sometimes ^jfclrn ‘so
littl^i in a week that, if required to pay the weekly rate regardless
of earnings, an utterly disproportionate sum pight d)e absorbed
for provisioii against ill-hea.lth as compared with what was left
for health. To meet this difficulty a system w^as devised by which,
subject to certain conditions, a unit of earnings was fixed as
equivalent to a week’s w^ork, and contributions were paid accord-
ingly. The Commissioners thus followed a system which had
been adopted at Ghent, if I remember rightly, in another con-
nec£?bn. The fixing of the units for the different trades must •
h^ve occasioned much labour.

Many interesting particulars are giveil respecting casual
labour.* There were many initial difficulties in the insurance of
this class. An employer taking on a man for^ a day djd not

THE WOBKING OP THE INSUBANCE ACT

629

1913J

woltome the prospect of having to pay contribution for a week.
A labourer, correspondingly, might find a difficulty in getting
T^'ork j^iitless his card was already stamped. It is stated that in
®some coaP yards employers who used casual fabour have found it
possible to efigage regular workers. In other cases arrangements
have been made whereby the liability of a group of employers
has b^en pooled. * In some instances, this has been done through
the’ labour exchange— dock labour at Liverpool and Goole,
clotji porters at Manchester. In others, the arrangem*entg have
beeu made j^rivately between the employers or in conjunction with ,
the men’s societies — r.g., trimmers 'tnd teemers in the North of
England, trimmers •at Swansea, bakers at Dundee. Arrange-
ments of this kind may form points around which definite s'^hemes
for (|ecasiialisation may crystallise, though the problem is not so
easy of solution as tlje comfortable doctrines of the armchair
sometimes suggest. . , • •

It is, of course, too early to make any comments on the
results of the^ ^ct. But there are already, a ‘number of out-
standing facts. The number of deposit contributors is much
below w^hat Was expected.* For England, the estimate was from
800,000 to 900,000 ; 4 he actual number is 820,000. It xjas con-
templated that deposit contributofs would largely be persons
.*l)rokey in health. It appears that, in fact, most persons are
deposit contributors from ignorance or misapprehension, o/c
because they cling to a patrician aloofness out of keeping with
their plebeian needs.

The deposit contributor was expected to be one of the main
.difficulties of insurance. The difficulty haj largely disappeared :
the societies were so eager to swallow members that they did not
scrutinisS the quality too carefully. 3t is open to doubt wliether
the real social problem at the bottom of •the whole question has
been eased. * Indeed, it might be contended that the very scatter-
ing of the difficulty will make it moi^ elusive, and render more
troublesome any social surgery that may be necessary. And the
societi<ls themselvesC may pay the penalty of their eagerness in
, th« drain on their funds.

The number of the voluntarily insureu is very much smaller
than was anticipated. This may be due parfly t6 prejudice, pjtily
to ignorance. It has to be remembered also that the compulsory
net is cast wide.

The industrial societies have secured a large number of
members, thanks particularly to the active agents prying their
wares. • Of the fiota^ it), 300 ,000 members of approved societies in

uni!

680 THB ECONOMIC JOURNAL [DEC.

England, 4,600,000 belong to friendly societies, 1,200,000 to
trade unions, 3,800,000 to industrial societies, and 600,000 to
collecting societies.

The Commissioners have been compelled to improvise and to^
adapt, and they have shown a wealth of initiative and a readiness
to change their decrees to meet new circumstances which the
rigid conditions of their existence do not often ‘allow to Ggvern-
inent departments. The work of the Commissioner ^’ranging as
it does from the skilled artisan to the casual labourer, frbm^th®
pack ahepherd of the bord^’ district" to the daily charwoman,
should throw a flood of light on economic conditions. Their first
report does not make easy reading— more ‘‘scientific’’ reports are
promised — b?it it contains a large amount of very interesting
material. It was undoubtedly wise to give in this first report a
(letifiled account of the measures which have been taken to initiate
tJie bfggcst experiment of recent times, an experiment which
penetrates deep into, the domestic^'life of the people. We must
wait years beiore we can hope rightly to gauge the results of the
experiment, before we can judge to what extent ifr^mitigates and
relieves sickness and invalidity » and, st^ll more important, to what
extent it prevents these misfortunes and ejontributes to the up-
building of a hit^althier and sturdier race.

il.

The introduction of the scheme of insurance against unem-
ployment was a much simpler task than that of the ii^fsiirance
against sickness and disablement. But in some wajs it is^ the
more significant. Fo;* compulsory insurance against ;.>jckness and.
disablement there were many precedents ; for compulsory^ insur-
ance against unemployment, on anything approaching scale
attempted in this countVy, there were none.

About 2,250,rK^0 persons are insured, 25 per cent, of these
a?e members of associations who have made arrangements with
the Board of Trade for administering unemployment benefit ;
75 per cent, are directly under the administiation of the Board
of Trade. Less than one-fifth of the total number were previously ,
insured against unemployment.

jThere have been 560,000 claims for benefit during the, six
months ended July, 1913. These claims were made by aboiif
. 400,000 separate persons, a number of persons having claimed
more than once. Contributions by workmen and employers ap
being 'paid at the rate of about £1,800,000 a year; in adJitioh,
the State ^ants about £600,000 a year. The outgoings^ for the
period under review have been at the rate of about £700,000 a

1913] the wobkiwg of the insurance act 631

There was a reserve of over £1,600,000 on the 12th July,
1913 ; it must bg- remembered that contributions were paid from
July, 1912, benefit only from January, 1913.

Unfleri^the Act, 10 per cent, pf the gross •income is to be paid
as an appropriation in aid of administrative expenses. There is
no estimate ^in the Report of the actual expenses. They are
extremely difficult to estimate because the ’ work is so’ closely
bourfd W 7 th that o4 the labour exchanges. But it seems desir-
^able ^at axt* endeavour should be made to arrive at an esti-
mate, because the cost of administration will be an ini^ortant
factor in judging the 8che.me. ^ *

In addition to the compulsory insurance, the Act provides for
payment of subridies to vohfutjry insurance^. 275^ unions, with
over 1,000,000 members, came under this provision. Over one-
half of the members were also compulsorily insured. A consider-
able number of com{)ul8a\'ily insured workmen, who wiefe not
insured before the passing o4 the Act, have sincfe become volun-
tarily as well as compulsorily insured. * .

l^feren^ycan be made to only a few of T:he interesting topics
raised by the Report, wffiich is well prepared. The unemployment
claims have been below ftie actuarial estimate, even allowing for
the exceptional industrial prosperity. Unemployed men generally
found work readily : during a period for which particulars are
givefl, in 30 per cent, of the claims work was found whthin the
first week of unemployment. The large number of claims,
however, despite the great boom in trade, i? striking.

A Smaller proportion of the compulsor' y insured has belonged
to ‘the buildiAg trade than was expected. This favours tlie insur-
ance fund, for unemployment is highei^ in this trade than in
^h^D^^and claims from workmen in it have been heavier than
from workmen in other trades. Claims Jroni the London district
have been ^much ^higher than from most other districts. !rhis,
of course, has been partly becausg of the large proportion of
workmen of the building trades in the metropolis. But the
London claims have been heavier in other trades also. The
experience of the insurance claims should throw much instructive
light on the variations of unemployment in different trades and
districts.

Repeated claims for benefit have been made in a large nT/mber
of instances. In a week at the end of June, 1913, 57 per cent,
of the applicants had already claimed once or more times, 29
cent, had claimed twice or oftener. This brings u.^ face to
face jvdth the problem of a residuum of frequently unemployed
persons. Of .the claims to benefit disallowed, nearly one-half

632 THE ECONOMIC JOUBNAL [DEC.

were rejected because the claimants had not been employe^ in
their trade for the necessary twenty-six weeks..

The Eeport contains many other matters of deep interest
(including detailed information respecting the Liverpool scheme,
for the decasualisation of dock labour). As stated in the Eeport,
the insurance has been in force for much too sh 9 rt a time .to
justify .conclusions.. The industrial sky has been so bright that
almost any scheme would have thriven. It js /ortunate that the
new project was launched at a time when a large K'serve^ would
be autfjmatically accumulated. But it is not difficult to see that"
seri(5us^ problems will arise. It is open to question y hethei*the
method of verifying unemployment will be found adequate when
work is not so readily to be obtained. During times of depression
large numbers wifi probably fall out of benefit and continue
iineipployed, and a demand will arise, a demand the more
clamant and insistent because coming fromtpersons who have paid
c<!ratributions, for some form of special assistance. But oven the
most enthusiastic advocates of compulsory insurance will not claim
that it is more than one step in dealing with t^e problem of
unemployment. ^

_ * I. G. Gibbon

OFFICIAL PAPEES."

Report of an Enquiry by the Board of Tmdc iniq Working-Class''
t Rents and Uetail Prices, together with Uie Pates of Wages
in Certain Occupations in the I'rincipal Towns of the thuted
Kingdom in [Cd. 6,955.] 1913. Pp. 1 x 111 + 396.

Price 4s. lid.

This Eeport is variable in two ways. It. contains a mass of •
useful and interesting information in regard to rent, -the ..^-eti^il
prices of working people’s necessities of life, and the rates of
wages in three important trades— building, engineering, and
profiting. But in addition to all this, the Results under each
heading are compared with Ihose of the similar enquiry of 1905.
In both cases the report covered conditions in eighty-eight towns
in the British Islands, and the tables in kie present volume
provide detailed figures as well as index-numbers and percentage
changes for each subject of investigation. In every case, more-
over 'London and the provincial towns are considered separately.

In regard to the rents of houses, not only are the prevailing
Amounts given, but the different types of lipuses are described.
In Lorvdon, whether in the county area proper or beyond,, tljc
striking fact is the many instances of sub-letting, though, of
course, this is more prevalent in the older ardas than *in the

OFFICIAL PAPBBS

633

1913]

newer. In the provinces there appears to be less sub-letting,
ani the iype of house is different from that of London, excepting
only the “Newcastle flat, which is found in the Tyneside district.

Eents in London are very much in excess of those in the
provinces. Of all the provincial towns, Jfewcastje shows the
.highest rentals and Macclesfield the lowest. If the index-number
for London be taken as 100, ‘that of Newcastle is 84. and of
Macelesfield 38.* Taking the British Isles as a whole, London
being^left ' «iut, we find two groups roughly distinguished, one
' highly rented and the other with low rents. The* Northern
codnties, ^e Southern counties, Wales, and Scotland belong to,
the first division ; Yorkshire, Lanckahire, Cheshire, the Midland
and Elastern counties, and Ireland to the second. .In addition to
this geographical survey, it is important to notice that there is
in general a fall in the level of rents as we pass from the larger
to the smaller towns*

But what of the changes since 1905? Thg Report here is
exceedingly useful. The general results .concerning rents may.
bo thus surpinarised. In London rents. haVe on the whole
decrea&e(i (Spring the last seven years. Of the remaining seventy-
seven towns under review, forty-five show increases varying from
1 to over 10 per ctftit. ; in seventeen there was no chiyige ; and
in the remainder there have been decreases from 1 to 10 per
cent* Combining all the details, the Report proceeds to establish
the general result of a decrease of 0*3 per cent, lor the whole
country in the period 1905“19i*2. 4diat is to say, rents have
.changed but little. ^

, Far otherwise is the verdict as regards retail prices. Here
there has been a material increase in the.period between the tv^o
^BiKjJuries. The commodities that have been listed for the purpose
of the Veport included bread, flour, potatoes, meat, bac®n, eggs,’
milk, buttes, cheese, tea, sugar, and coh.l— a fairly represent^ative
'group, seemg tlht it has been estimated that probably three-
quarters of working-class expendifure on food is in respedt of
these items.

One or two facts of interest in connection with these com-
tnodities are worthy of note. The cheese largely consumed by
the working classes is mostly of the Canadian variety ; the eggs
. «re usut^lly of foreign origin ; the commonest form of sug^jT to be
met^with is white granulated ; and while Danish bacon pre-
dominates in London and the South-Last of Lngland, Ameiuan
‘•bacon is most frequent in the JSorthern counties and the

Midlands. . *

in the case’ of rents, so also in that of general prices,

634 THE ECONOMIC JOUBNAL [DEC.

Macclesfield would appear to be the cheapest town to live fin.
On the whole, prices are higher in Scotland than, even in London,
where they are higher than in the rest' of the country. But
when the rise between 1905 and 1912 is compared lor, different <
geographical *areas, Lancashire and Cheshire, Wale3 and Mon-
mouth, and Ireland show the highest mean percentage increase
and the Southern counties the lowest. But the^^ difference is not
very great. The only exception is m the case of tea^or which
there has ^been a general fall all over the country

Th^^ cost of clothing show^ the same tendency as that of^^he
• necessaries of life. On the basis of the 1905 price/=100, the
cost of bespoke clothing in 1912 was ll^T ; of ready-made
clothing 109*3 ; and of underclothing 114*6. ' ''

Combining rents and retail prices, we find that London has a
higher index-number than any other town in the United Kingdbm,
and ne^'t to London comes Croydon. •The^’town standing lowest
on^\he list is M'acclesfield! Finally, the percentage of increases
‘between 1905 and 1912 in the towns considered as a whole show
the following figured : Kents have increased 1*8 p^^ cent, (this
is exclusive of London) ; retail prices 13‘7 per cent. ; rents and
retail prices combined 11*3 per cent, * Details for the various
geographical gro^ips are given* in the following table : —

Percentage Changes in Kents, Betatl Prices, and Rents and
Retail Prices Combined— Geographical Groups.

No. of

Moan Percentage Increase ( + )
or Peorease ( ~ ) in

Geogrfiphical Group.

Towns

included.

Bents.

Retail

Prices.

•-

Bonts and
Retail
Prices
Combined. .

I Middle Zone

] {

-4*0

+ 12*0

+ 9*0

London Vinner „

-6-0

4 120

+ 8*0

J Outer ,, . .

Northern « Counties and

/ 1

-2*0

**>10-0

+ 'S'O

Cleveland

+ 0*7

+ 13-2

+ 10*7

Yorkshire (except Cleveland)

+ 1-3

+ 14*0

+ 11*5

Lancashire and Cheshire ...

! , 17,

+ 8-4

+ 15*8

+ 13*3

Midlar^ds

Eastern and East Midland

+ 0-4

+ U*4

*‘+11*6

Counties

i +8*1

412*4

+ lt)'5

^tthern Counties

t +1-2

+ 9*8

+ 8*1

Wales and Monmouth

+ 4'3

'+15*0

+ 12*9

Scotland ...

! -f-1-9

+ 13*1

+ 10*9.

Ireland

j +1*2

+ lo*0* '

+ 12*2

1913]

OFFICIAL PAPEBS

635

,The value of these conclusions would have been enormously
increased if we jiad hem supplied with a full consideration of the
changes in the rates of wages during the period. The three
I mdusliios dealt with in the Keport, though»fairly representative,
are not in ihemselves sufficient for any useful comparison with
*the movemoat in the cost of living.

But if the Ripport is not full on this head, it containiS (in the
Append.ki^ ample material in reference to the course of prices in
, the jprincipa^l foreign countries (France, Germany, the United
Stages, Mstria-Hiingary^ Belgium, Holland, Japan, Russia,
Norway, ^d Italy) and in Oanada^ New Zealand, and Australia.'
The following tabieiof index-numbers of food prices is reproduced
from this sectiou ; —

Country.

1900.

1901.

1902.

199.^.

1904

1905.

1900.

1907.

J908.

1900

1910,

1911.

•

1912.

United

•

Kingdom

100

101

108

102

103

iOO

10.5

10''

, 108

109

»J16

. AustrU

100

101

lOS

11?

113

118

120

128

135

Hungary

100

101

102

103

111

322

118

12'*

128

l.'5l

129

137

Belgium

100

101

102

118

109

110

112

115

iia

120

122

128

132

Piflrice

lOQ

100

9.5

100 ,

U)2

100

101

117

115

Oeriiiany ... «

108

100

10.5

105

' 114

lib

11(5

116

124

127

128

130*

Uulland

100

102

10,1 1

1 102

103

1 10.5

107

109

11.5

117

128

Italy

100 1

97 I

1 99

lOl

105

112

114

118

120

^'olway

100

97 1

1 100

103

108

109

106

108

111

119

Busiiia

100

104

107

102

104 !

1 112

116

130

127

121

United States

100

105

ill

111

113 I

113

117

122

126

133

140

1.39

Japan

100

108

120

18»

127

134

186 1;

, 182

18?

1.38

Canada

100

104

109

106 '

109

111

115

I2h

129

133

13.';

130

151

Auatralia

100

109

105 !

101

106

1(H

io;i

108

116

, Mew Ze|laiid

100

• 101

100

109 I

102

107

112

117

108

116

—

i —

* Baden only; flgaras for the remaining Stat/oa not yet being available for this year.

M. Epstein

Board of Trade R^^port on Changes in Rates of Wages and Hours
oof Labour in the United Kingdom in 1912. [C'd. 7080.]

’ 19t3. Price lljcl.

•

The Export states that the net weekly anioimt of the advance
in 1912 was £13§,000 distributed ^mong 1,818,000 workpeople,
that is to say, a.i average increase of Is. 6d. a week. “After a
period of depression in 1908 and 1909, wages began to rise in
sympathy with tKe improvement in trade and employment, but
?he movement was somewhat slow until about May, 1912. After
that date, however, the movement.becaime more rapid, with the
• result that the number of workpeople whose wages were reported
as iifcreased during 1912 was in excess of that for any previous
year, while the aggregate amount of the net weekly increase w^as
exceeded twice only during the past twenty years, n^ynely, in
1900, and 1907— both years * of exceptional prosperity.” It*

636

THE ECONOMIC JOURNAL

[pec.

appears that, as regards the workpeople covered by the returns
dealt with in this Eeport, about 2^ million workpeople have,
since 1893, had their recognised working(time per week reduced
by nearly 6 million |iours. This has been mainly due to ’legis-
lative changes affecting about half a million undergrjund miners
and over one million textile factory operatives.

Board of Trade Report on Strikes" and Loc]f-outs and^onK^on-
ciliation and Arbitration Boards in the UnHetf Kipgdom
ma912. [Cd. 7089.] 1913. Price lOJd. • ^

Thi\s Eeport covers the period of the National Strike.

Tables Showing for Each of the Years 1000-1912 the Estimated
Value of the hnports and Exports of the United Kingdom
qt the Prices Prevailing in 1900. [Cd. 6782.] 1913.
l^rice 3Jd. . *

*'The prices of imported' foods rose sharply in 1912, while those
of imported raw paaterials again fell. On the whole the prices,
both of imports and exports, rose by about 2 cent. The
movements in prices since 1900, on the whole l.ubslantially
adverse to this country, are shown in the following table : —

Average Prices of

* 1

Imported Articles
of Food,

Total Net Imports.

Total Exports of
Homo Produce.

1900

100-0

100*0

1901

99*5

96*7 ;

95-2

1902

99'b

96*6 • i

90-8

1903

99-6

96-9 ;

90*7

190^

98'3

97-3

93^

1906

101-1

97-7 1

91*6

0906

I 100-6 ‘

1 101-8 i

97*1

1907

; 106-2

1 106*6

101*9

1908

107-6

102-5

98*0

1909

110*7

103-6

94*3

1910

111-8

109*6

! 98*4

1911

110-4

106-8

100*1

1912

116*8

108-8 ;

102*0 •

Report of the Local Government Board, 1912-1913. Part L
Administration of the Poor Law, the Unemployed Workmen'
Act, and the Old Age Pensions Act, [Cd. 6980.] Tl913.

" Price Is. 4d.

The# number of pensioners in England and Wales on the '
28th March, 1913, was 668,64^- and the total number ip. the

OPFIOUIi PAPEBS

637

1913]

United Kingdom was 967,921, made up of 363,811 men and
6u4,110 women. This is an increase in the number since 1912
of 4 per cent, ih Engird and 2*7 per cent, in the United King-
dom as a whole.

Ik ,

Memorand(p in Reference to the Working of the Tirade Boara^
Act, 1913. (H. of C. 13.4.) Price 3d.

To be revie^^ed.

% '‘V • —

Report on the Proceedings of the Board of Trad^ under
^Part^L of the National {Unemployment) Insurajfce^ Act,
1911.\ 1913. , [Cd. 0365.] IVice 9d’.

Reviewed above (p. 627)

Report of the Select (JonMiitee on the Wages and Conditions of
Employment of Uost Office; Servants. 1013. (FI. of C^.*268.)
Price 2s. 4d. “

To be reviewed.

•

Returns of^ke Capital, Traffic, Receipts, and Working Expendi-
ture of the Railway^ Companies of the United Kingdom for
the year 1012, ^with a general report thereon and^simimary
tables for a series of years. 1^13. [Cd. 69f)4.] Price Is. 3d.

The new Att, governing the form of the acc« >nnts and statistics
furnished by railway companies, has now come into force ; and
the above is, therefore, the last of these Animal Petiirns prepared
undeii the old conditions.

Re'rrn showing (n) in what foreign countries and British Posses-
^ sions the Railways have been in whole or part either built,
or acquired by the Government ; (b) the cost of building or
acquisition ; (e) the financial resdts. 1913. (H. of C.*'287.)
Price 7Jd. *

A VERY useful return relating to the countries of the British
Empire and to fcjty-two foreign countries, prepared by the Com-
piercial Department of the Board of Trade.

Report of the Treasury Committee on* the Mode of Issuing the
Dollar in the East. 1913.’ [Cd. 6973.] Price ljd<.‘

This Report d^als with the best method of remitting dollars
out-of-the-way places where they are required for |)ayments
by the Foreign Office, the Wai* Office, or the Admiralty.

638

THE ECONOMIC JOUBNAL

[mc.

Interim Report of the Royal Commission on Indian Finance q>nd
Currency. With one volume of Miputes of Evidence, two
volumes of Appendices, and Generlil Index. 1913. [Cd?
7068-7072.] Pr,ice ^d, +28. .lOd. +2s. I9d. +2s. '5d,+ed.

This interim report is no more than a covering paper to the^
evidence and other i)apers heard apd received during the summer.
The greater part of the two volumes of appendices is taken up
with ofiScial papers put in by the India Office in explaliation of
the existing system.

. - r- ^ .

Review of the Trade of India in 1912-13. 1,913. [Cd. 6960.]
Price Is. Id. ,

This anndal statement contains the analysis of foreign trade,
taker), both at the actual prices and at the prices of former years,
whidv has formerly been published* separately. The index-
number for Indian rupee prices in ^912 shows that the great fall
‘ that took place in prices of food grains between 1908 and 1911
was followed by a censiderable rise in 1912. The Jevel of food
prices in this year, however, w^as still below thU of 1909.
Textiles, on the other hand, in 1912; as in 1911, were much
higher tlpan in the three years j)receding. Sundry materials were
also somewhat higher than in former years. The total result is
to bring the index-number, which is a simple arithmetic mean of*
tht prices of thirty -nine commodities, back to wiiat it was in
1908, the general averages for the five years 1908-1912 being
139, 121, 122, 129, and 139 respectively. ,

Statistical Abstract relating to British India from 1902-3 to
191H2. 1913 [Cd. 7078.] Price Is. 3d. ’ *

Statistical Abstract for the United Kingdom ifl each of the last
fifteen years from 1898-^1912. 1913. [Cd. 7022.] Price

Is. lid.

Index to' Consular Reports on Trade and Subjects of Generrd
Interest, 1912. [Cd. 7102.] 1913. Price 4Jd.

V *■

Tms Index serves to increase very greatly the value of Con-
sular Reports, which are very numerous, and do not necessarily
ccfilie to the notice of all who would be interested in their con-
tents. yhere is an Appendix giving a list of the Reports indexe(J
4 and also the price of each Eepori.

OUUBBKT TOPICS

639

1913]

Oftcial Year-Book of the Cotnrnonwealth of Australia : Statistics
for the period 190^-1912. Melbourne. 1913.

Thb sixfch issudl prepared by the Commonwealth statistician,
Mr. Gf. TE. Knibbs. This ver^ valuable compilation contains a
large amount of descriptive matter as well as statistics. In this
issue special attention is devoted to labour and industrial
statistics. * •

* t

Exhohung iiter Arbeitsnachweise im Dcvtschev BcichS nj^ch dent
• Stan^ von Ende, 1112. Beflin 1913.

This is the sujoplement for June, 1913, to the Rcichsarbeits-
flatty the JourP' l of the German Labour Department.* It com-
prises a report on the state ol the labour e^fchangSs, private and
semi-private, at present existing in Germany. Of the^2,22^
labour exchanges vvljich were investigated, 418 stated that they
received regular financial assistance frem })ublio .authorities. •The
data, which it proved possible to obtain, do not appear to be
very exact

CuREENT Topics

A cORRESPONDfiNT Writes : The meetiiig of Section F
(Economic Science and Statistics) of Ihe British Assoeia-
tiotf at Biriningham (September 11 -17) ' sliowed an im-
provement in several w’ays on its immediate predecessors.
There was a very fair muster of economists. Local members
took^a full part •in attendance and iisciishioi^, while there
vCere few of those star turns which, thougli they may attract
numbers, disarrange the time-table ^and discourage debate.
‘T)5 th^ last day, when the Professor of Finance in Birmingham
University read his paper on the Economic Effects of the Panama
Canal, the attendance was nearly as full as on the first day.
In fact, there was an average attendance of abput a hundred
members throi.ghout the meeting. The ground covered is

indicated by the, programme

•

^Thwrsdayt September 11.

1. Presidential Address by Rev. Philip Wicks ’eed.

2. Discussion on Trade Union.s and OoJ?artrjprHhip— Papers by De. Charles

® ^ Carpenter and Me. John B. C. Kbeshaw. ^

3. J^OF. C. H. Oldham— Tho Scion tifio Study of Business Organisation.

Friday y September 12 — Discussion on Inland Waterways

1. Lord Shtjttlewobth — The Improvement and Unification of Inland Water-

ways (read by Mr. Neville Chamberlain). ^

2. Sir John Purser Griffith- — SoiAo Reasons why the State should improve t^e
** Oanals und Waterways of the United Kingdom,

640

THE ECONOMIC JOUBNAL

[dec.

3. Mr. Frank K. Durham— The Waterways of France, Belgium, and Germimy.

4. Mr. R. B. Dun woody —Inland Waterways in Ex^land. • ^

6. Me. W. M. Ac worth— a forward Canal Poliiy— he economic justification,
(read by Professor Oannan). f ^

Monday^ September 15 — Dis^iussion on Prices and the Coatlof Living : — '

1. Dr. a. L. Bowley— T he Relation between the Changes of whollsale and retail

prices of Food. ,,

2. Mrs. . Frances Wood— T he Construction of Index Numbers to show Changes

in the principal Articles of Food for the Working Clashes.

3. Miss Ckcile Mathieson — Working-class expenditure o'n Birminghalii.

4. Mr. W. H. Whitelock — The Industrial Credit System and Imprisonnj^ent for

Ifeht:

5. M;r. iyEONARD HiLL— Economios aud Food Va'lues.

Tuesday, September 16. ''

1. Prof. Muirhead — T he Economic Order.

2. Dh. W’. R. Scott— ‘Modifications of Diminishing Utility.

3. Mr. a. J. liKNNY — How far are Mathematical Methods really of use in

Economic Science ? ^

4. Mk. Samuel T. Wilson— Some Effects of Compulsion on the Economics of

, Sickness Insurance. . * •

We^esday, Septembef 17.

‘ 1. Prof. A. W. K irk ALOV t- Some of the Economic Effects of the Panama Canal.

2. Mr. F. Tilly ARD-^E n.(;lish Town Development in the Nineteenth Century.

3. Mr. C. Reginald Knock— Human Geography and Industry Flapping.

“In tl\e discussion on canals^ the canal authorities, statisticians
and engineers, occupied the greater part of the time, but the
paper by Mr. Acworth (read and replied for by Professor Carman)
was sufficient 1o maintain the balance. At the close the general
sen.se of the meeting seemed to be that, while the canals might
with justice demand the creation of a waterways board toving#
power to enforce through rates and organise the system, the
financial propositions stouid be developed gradually and con-
ditionally upon large contributions to the capital outlay fro»^.
the areaS primarily benefited. ^

“The discussion on Pricei and the Cost of Living showed the
high level at udiich a statistical debate can be ifiaintained in the ‘
right hands. Eathcr unusually, the charts enabled the audience
to comprehend better the points under examination. Material
such as that supplied by Miss Mathieson was* just the kmd of
contributio*n most worth having from the locality in which the*
Association meets. The same applies to the papers on allied
subject^ by Messrs. Whitelock ai\d Tillyard. Pure theory
up at times, and everybody, it seemed, was heretic — a contrast,
tru^y, to the iron creed of an earlier generatioy. The President
gave the lead, throwing the science back for its origins on to^
the broarf, if slippery, back of psychology, and concluding with
a demolition of the \»7ell-worn apparatus which Ibas sfi often served

1913]

CtJBItENl? TOPICS

641

for* an explanation of rent and of the conditions of supply.
Cobbett’s herri^g was faken with relish by the audience, female
as well as male.

“ year the ||\.ssociation goes to Ausiralia.’’

A CORRESPONDENT writes :-i-Eecent economic and social ten-
denci^es in France have been* responsible for the adoption by the
French^'^Uovernmedt of a somewhat novel policy — the granting
oof ^(Ssistance *to large families. Among other causes ttie^ follow-
ing •have ^een mentionec* as having contributed to bri^jjg^mbout^
this result\the high cost of living, *1116 lack of housing accommo-
dation, the declining birth-rate, and the increase in the period of
compulsory military service from two to three years. 'T'he law
was^ approved on July Idth, 1913, and its provisions are fairly
simple. In the first ylace, a child is defined as a boy or girl up
to the age of thirteen. Every head a family having Ho ^jare
• for more than three children? legitimate or, recognised, and being,
in straitened circumstances, shall be eniitled to receive an
annual gra^ in aid of not less than 60 nor more than 90 francs
per annum for each additional child beyond the first three. If,
however, the cbild^gu are under the care of their mother by
reason of the death or disappearance of the father, the relief shall
^be given for ev^ry child beyond the first. In the same way relief
shall be granted for every child beyond the second if the mother
has died or disappeared. Finally, children between the ages of
thirteOT and sixteen for whom either parent has signed a contract
of apprenticeship are to be regarded as children under thirteen
for purposes of ’the Act. The amount of the allowance is to be
dgtj^rminjed in each case by the municipal authority, subject to
the.appiioval of the Ministry of the Interior, and is to •be paid
monthly and in advance. The necessary funds will be ca^tri-
buted by tffe central government, the communes, and the depart-
ments.

AlIj this will i'Jiean mqre money for the needs of the State.
']Jhe increased period of military service will only add to the
burden. Consequently, while hitherto Fiance has been one of the
G^eat Pqwers whose system of taxatiod did not include jneome
'tax, proposal has now been ma*de to have recourse to this •source
of revenue. A Bill is at present before the Budget Committee, pf
the Chamber of Deputies, and one or two of the details are inter-
esting. Incomes to be taxed a»e such as are derived fiftm land
and hsuldings •md flom securities, callings, professions, or occu- '

642 IHB ECONOMIC JOUBNAL [DEC.

€

pations. Every taxpayer whose income is less than 20,000 francs
will have the right of deducting from i|j 1,000 francs for each
person dependent upon him, these beinj^ either aged parents or
relatives over seventy who are without meins of tlieir ov/n, or
children under sixteen. Incomes under 6,000 francg will be tax
free. Those over this amount will be taxed on a graduated
system -as follows

Per cent.

•

On Incomes between j

* Per cent.

c ^

On Injjomes between

. '* i

, f

1 V

5,000-10,000 fr.

; 5|

SO, 000^-- 60,000 fr.

10,000—16,000 „ 1

. so.ocr.— 100,000 „

15,000—20,000 „ 1

100,000—200,000 „

20,000—26,000 „

1 6^

200,000—500,000 „

25,00Qc-30,000 „ i

1 7

over 600,000 ,,

Eurtnermore, unmarried persons over thirty years of age are to
pay on tlieir revenue a surtax of 20 per cent, of the above-
mentioned rates. ^

I ^

An Oxford correspondent writes : — “The proposal to establish
at Oxford a ‘ Diploma in Commerce and Economics ’ for members
of the University ‘ intending to pursue a \)usines8 career ’ was
at the last moment, and raiher unexpectedly, killed by its friends.
At a Convocation held on Tuesday, November Htb, Mr. Sidney^
]Jall, speaking on behalf of the promoters ox the proposal, ex-
plained that the amendment introduced into the Statute by Con-
gregation limiting the Diploma to candidates who had taken the
B.A. degree had rendered the statute unworkable and made it 'a
contradiction in terms. The character of the proposal had b*een
completely altered, and it would be difficult, if* not impossible,
to adapt the original framework of the statute to v’hat .was
essentially a new proposal. It w^as a proposal, moreover, w^hich
would limit the Diploma to an almost negligible quantity of
candidates, vvhile the teaching required for the Diploma course
would cost the University a very considerable annual sum. The
Diploma was devised in response to one of the suggestions made
in the Chancellor’s letter on the Principles and Methods of Uni-
versity Reform , though the actual proposal was formed on rather
less comprehensive lines than the Chancellor himsel| had in-
dicated. It cannot be said that the proposal commended itself
tp^ a wide section of the University : it was generally felt that
the liberal education provided by the ordinary courses of the
University was in itself the bestvtraining for business as for oth%r
professions, and that, in any case, it was* difficult to devise a

CURRENT TOPICS

643

1913]

whi(‘,h would really fall w'itliin the proper limits of Univer-
sity tobdiing. Op Ihe^ other hand, the active opponents of the
statute were ncfl. nirnefous, and had so far failed to make any
mipi'ifrssiou on thei fortunes of the stati^le, that, but for its
fnt'nds corning to tlieir rescue at the eleventh hour, they wouhl
hardly have availed to throw it out. The rejection of the present
statute d?)es not therefore nieacT so uuieh the -abandonment of the
{)rop(«a^ as its reco? ndcTatidn. In the iiieain\ liile the (‘xisfing
diploma in Eeonomics and Political Sc'ience provides ap excellent
'basis •for fLutlKu* development on lin(‘s specially approjftiate to
‘ pcKsons intending t.o pur.me a Inismes.^ carei'r ' and ^rolaably*
this is thei^)est and safest line (d‘ advance, more particularly as
Uie Diploniaiis allowed to cornl lor the purpost's ot' a de^iree/’

this conncalon, atliujtion may f>e called to the W(?rk ol'
llui C)\foul S-\!a! atfd UoliticaJ Studies Association, ol, Vbich
Mr. Sidia\y P»all is cbairmai#, Professor \\ . (1. 'S. Adams secre-
taiy* and Professor (leblart treasurer. It *has, recently started a
scheme oft. liring for sociaJ work, inbmded primarily for stifdents
who have Aade or are making, a study of social and (H-onoauic
theory and historV, suclf as is providcil by tlu'. diploma course
111 e<iO!iomic.s and ])Milic<d sciein ev Tlic coursijb of Irartiing con-
sists of two parts : first, the studv and obsrrvation at Oxford, for
•ti period of ncft l('ss than tlin'c terms, of the* organisation and
working of certain local institutions siicli as tiie ('ily (Vaincil,
the Labour Exchange, the (Jharity Orgaru' tion Sociidv, and the
^’oor 4javv Guardiiwis: and secomi, ai' in^juiry of a- specified
cluracter carried out in vacations elsewlui'e than at Oxford, and
a ^N'.ilten rejiort oil its result. .During the jiasl tiTin a series of
lectm-es have been given at St. John's Oollegi^- by well-
kiion n Experts on various departinents.ol socaal and civic work.
Great str(^s^':^ is laid u]>on clinical nnou^. This term, for instance,
Students have panl visits to soiik' municipal schools, as well as
Jo meetings of 11' Pity f 'Ouncil and of the J^oor Law Guardians.”

An associal'ioiV has been formed in Canada, under* the title
of the Canadian IMlitk'al Sciimce As-ociaiion, as “a national
society for the full and free discaisaion i)l Canada's political and
•economic and socuil problems.^' Sitnilar organisations *Jn tlie
ITiitdil ytatos, where they have played ahotable part for a quarter
of rcceniiiry pasf, itidude many Canadians among their members.
' kr December., 191*2, t be re foru, ^advantage was taken of •the fact
•that 411 umisually l«arge number of CJumdians were in attendance
No. ^92. — VOL. XXIII. X X

644

THE ECONOMIC JOURNAL

[dec. 19133

at tJie Boston ineeiing of the American Economic Association,
to discuss the organisation of a Canadian society. The first
annual meeting was held at Ottawa eatly I’d September, whem
numerous papers were read on the aims oifthe A8bOciati6*n and
on various Canadian economic problems. T^roi, Adq^m Shortt, of
Ottawa, has been elected as the first President, Prof. James
Mavor; of Toronto; as a Vice-President, and Prof. O. D. Skelton,
of Kingston, as Secretary-Treasurer. Dr. tJames BenSTr and
Prof. G. H. Lloyd are amongst the members of Council

Aj^intynents, c/.c. — Professor S. d. Chapman ^has gone to
South Africa at the invitation of the Government pt the Union
of South Africa to act as Chairman of a Commis'jion which is
<0 inquire into wages, working hours, and cost of living in various
towiis, and also into the question of a ininimuin wage. ^ The
Conmiission was primarily appointed on* account of the recent
troubles on the Hand, but it is aho visiting a number of other
districts, including ^Pietermaritzburg, Durban, East London,
Alice, and Port Elii:.abeth. Professor Chapman left England in
September, and expects to return about the middle -.)f January.

Mr. C. d. Hamilton, who was Secretary to *the Poyal Economic
Society from 19j^6 to J912, has been appointv*A to the Minto Cdiair
of iCconomics in the University of Calcutta. Mr. flamilion has
been acting as Ijecturer in Economics at “ When's,” and lielu
1‘flst year the Dunkin Lectureship at Mansfield College, Oxford.

^CENT PERIQPICALS AND NEW BOOKS.

The Quarterlif RevieiD.

October, The Financial Difjienliics of Federalmn. Edgar

CrammonV The^VagaHes e^f E' cent Political Economy . Prof.
J. S. NrciioLsoN. A levies of recent wprks, aspecial^y Mr.
\\’icksteod’s “ Common sense of Political Economy,*’ and Prof.
Pigoujs “Wealth and Welfare,” which arc criticised advei^cly.
Indian Progress and Taxation, Lord Cromer. Profit -shtiring.
Prof. W. J. Ashley, a study of ij;ie Board pf Trade ltejM)i*t
(1912), and other recent wAks.

The Nineteenth Century*

December, itlB. A Mininiurn Wage for Agriculture, Pr<;>. A. C.
PiGOU.

Economic I^eciew,

.QcTOBjiiR, 1913. , On some Fundamental Notions of Economics.
J. A. Smith, A criticism of MarshalTs definition of wealiJil.
Prof. Smith would prefer to define an “ economic good ” as being
“whatever is the end or aim of non-etMcul volition.” The
Ow^prship of Capital, Sir Benjamin T rowne. Brief reflec-
tions on the relations of capital and labour. The Census of
'Production - and Labour Propaganda. J. C. Pringle. Old Age
Pensions. G. *F. Kogers. Illustrated by C.O.S. Cases.
^con(Tmic Conditions in North-West Canada. Prof. Humfrey
MichJIll.

, Bankers' MaqaSine.

October, 1913. Callable Capital in ^anks. A discussion of the
* wisdom of reduciiig the uncalled liability in Englisli Joint-Stock
Banks.

NovemiTer, 1913. Report of Bank of the Netherlands^ 1912-1913,
TTecember, 1913. Hongkong and Shanghai Banking Corporation.
• The opening of this bank's new Lor^lon office is made the
occasion of some account of its pijigregs.

Women's Industrial News,

October, 1913. The Case of the Sub-Postmaster's Assistant, Mrs#
Bernard Drake* Labour Laws for Women and Children at
Home and Abroad. Anne B# Page. A synopsis of the pro-
visions of the laws of various countries.

X X 2

646

THE ECONOMIC JOURNAL

[dec.

Clare Market Review.

November, 1913. Thr Telegraph McsHeWgci^ ' ihc Vanhoy.
N. B. Deakle. Oil some attempts tc? diminish “blind alley 1’
labour. Some Branches of the Britishf Library of Piiliticf}]
Srienre. ^ TIL The Unifed Riates Govif /riJncnt Puhlicatiovs. *
11. A. Bunnell.

Liverpool' Econo}Hic and StaiisticaJ Soricly.

Tuansactions, 1012-13. Social Statistics of Ifeticrfield MaVidcipul
\Var(r [Lice r pool). F. (i. D’Aeth.. The Housing Problem.
C. Sherlock. The Problem of Federal Finance *iS4Gar.

C'RkMMONl), . i. ♦

The Fjih'jcjiics Review.

' * iT

JuL\, 1913. The effrei of econ()}nic conditions on the birth-rate .
W. C. ,AIarsiiall. French Commission on Sjepopulation .
•H. Onslow.

OcTur.Eit, 1013. Deprfpulation and Lagenics. — 1. IjUCIE]^ Myfucji.

, ' «

' * Inter national Review of Coyfiineree and Indusiry.

December, 1913. This is the first issue of a new monthly (pric e 2^'.
a number, or FI Fs*. a year), under the editorshii) of Mr. T. Swin-
bonie Shehlrake. Its object* is to deal “with internal iiuia!
comnaux^e and industry,” and it will be prim written “lor
tile iirincipals of great eommercia] finhs having liusinirss interests
in al[j ])arts of tiie world.” Fc'rsonal pariigraphs and disguised
adv(a’tisemoifl.s are to bo rigorously e^icliided. Most of th*'
ariieles are short. Monthly Koi<‘s on C 'on mercial Conditions. *
Commerce and the IJ niversiUes. W . J. AciiLiifw A sagg^'&lio?7
to English business men that “tiie time has now t5ome when
it w ill he WHU'tli while, evtni foi them, to take ‘ higher eommereial
ediuaition ' a little more seriously.” Trade R(ni(es as they trill
he affected by the Panatna Canal. W.’ L. JuiviNO.s'J’fiN. (Jil
Fuel. A. J. Liverseuge.

« I

Quarterly Journal of Economics (Harvard). «

AmmsT* 1913. Marginal Uiihty and Marginal Disalility afi altimaie
, Standards of Yttlue." E. ITatsoNS. Utility and Disutility
are regardc*d as alternative standards. The^Com tn'odity Clause
Leglslathon and the Railroads. Eliot Jones.

Ortginal Cost vcrs>UH lie placement Cost as a Basis for Rate
Regulation. II. \y Haves. By a former chief engineer of the
Ameriean Telc^phoiie and Teli‘graph Compjmy The Marginal
Pro(htctivity versus the 1 m patience Theory of IntcrcsT.
Harry G, Brown. A criticism of Prof. Fisher’s “Impatience,”
or “Time Preference” Tl^eory. PigotPs Wealth and Welfare.
AfiLYN A. Young. Railway^ Rates and. Joint Costa. Pnof^s^
Pmou and Taussig. A continuation of this controversy.

The American Economic Review <Boston).

Sei'TEMIEr, 1913. A (Uassiflcatiiyi of Pooh and Associations basief
on American Experiences. W. S. Steve.ns. With interesting

EECENT PERIODICALS AND NEW BOOKS

647

19t3]

•

examples. Possible Complications of the Oompensnted Dollar
J. M. Clark. . fi friendly eritic. Monopoly and Corn pel itive
Prices. E.^E. |A(}^ij:u. A criticism of a pamphlet hy Prof.
Bilks. The Impaiicnce Theory of Interest. ,«Irving Fishkh

and p. B. Seager. The continuation of«a cont/’oversy.

Political Science Quarterly (New York)!

September, 1913. Beyidaiion of State Taxaiicm. F. J. ^iooDNOW.
D^elopmcnt of S^indicalmn in America. J^ouis JjKvink.

• •

AnmJs of American Academy (rhiladelphm^^

SEPiHiiMBEiA 1913. A sori(T» of articles .on The Negro's in

Fifty Y^ars.

^/)Urral of Political 1‘iconomy (Cliicjigo).

BcToiiEK, jOid. Money Prices. — 1. 1. 11.* Magee. ^ “A

Stal.' -iticul Study of i'l'icr MovimuMils.” Att JnahjsiH of the
*Crisk Cycle. Tiiuonp ENirLAxNo. Thr, auihor's ‘j:f‘nci’al

coiudiisicui t hat tile primary movements are: iniTranji'd |)ro-
m^ition activity, cvpansiou of credii#, rise of prices; dia-natsial
activity in promotion, contraid'on of credit, fall of prici'S. The *
liccent ITisiitrif of I aunigrafiiai and Ifnniiyraiion Pest rief ion.

• 13. F. Lala.. • * • •

Bulletin of the V.Sp Bureau of Labour (Washinplon).

No. 110. Hoar.s, Ea^iilngs^ and Ifu^'ation of Km pJoy'ment^of

earning ]]'o)ncn hi Selected hidnsirics hi the Do^trici of
Cohimhia.

^o. l19. W arising Hoars <>/ Women in IIk Pea Canneries of
Wisconsin . ^

N(> PJO. [fygienc of the Painters' Trade.

No. 121. Sugar Prices from Pe/incr to ^'onsunier. Pisensscs,

* (difcfly with ndefence to New York Ca.y, ihi' relation helMeen
• tile price pf ‘raw sni^ar and the ])rice to tlic consumer for ^p’ami-

' ;tod sugOtr, aii^ ilie cost added lo this ♦irice as it jiasses tlfrougli
^ .^.--.variirtjs liands from Cie refiner 1o thi'. cousininu-.

No. .122.% Employment of Women in J*oirer La a)i(J rirs •in Mil- *
icankee. . •

No. 123. F^mployers' Welfare Work. An account of what is floJU’
foi- their empffiyces by various American firms.

'No. 124. Conciliation and Arhitraiio^i in tjo' Building Trades of
Cr rater N cm Y o rk .

No. ISfi. Retail Prices, 1890 to April, 1013.

128. Wages and Hoai\^ of T.ahnnr in the Cotton, Woollen, and

• Silk Industries, 1890 (n 1012.

No. 120. TFa^rs and Hoars of Jjaboiir in the Lumber, Mdhrork.
and Furnitnre Industries, 1890 To l?n2.

131. Union Seale of Wages and Hours of Labour, 1907 f;) 1^12.
No. 152. Retail Priees'lS^O to June, 1913.

Revue d'Keommiic PoUiigue (Paris).

S*KPTEMBEK-OCTO]1KB. 1013. Ari %cchy>ique ef Eennowie f,oliliqiu\
E". Scnwn..)LANi?. Comment expViqvcr les moneemenis dc to.

648

THE. ECONOMIC 30TJBNAL

[dec.

population humaine. C. Tohgeon. Concluded. Leg Causes
demoaraphigues de Vexpansionisme^ colonial Ualien. B.
Micniks - . I

Jourpal des Economistes (Paris).

August, 1918. Definition, camcterc et indiies des arises. Yves
Guyot. Le systeme monMaire de V Argentine et les organ'en*
de .la circiihiiion. G. Lafond. Les premiers resultats de la
nouvelle loi anglaise d*assurancs sociale. M. Bellom^^ Con-
tinued* in September. t ^

Septembeij, 1913. La Marme marchande grecque. A. ANDRiiiADiis.
CoAtinued in October. La Serhie au lendemain de la guerre/'
A.I'Iuzet. . ^ ^ ^

October, 1913. M. Emile • Levasseur. A. , Deschtimps. Les
Finances des tulles au dehut du xx^ sieck". P. Zi^Ris. With
reference to France. * f ' *

Novjember, lf/13. De Minist^re des Terres et M. Lloyd George.
Yves Guyot. Le Confiit economique franco-alleniand.
Maurice Ajam.

Berne* Economique hiter^ationale (Brussels).

' August, 1933. L^Etfolution des his Europeo-Americainei en
maticrc d'accidends du travail. P. Pic’. L* Organisation du
Sysihne nwnedaire en Turquie. A. Illitch. A summary
account of the existing position, and of what reforms have been
proposed. L* Industrie cotonnihc en Italic. E. Krummb. Les
course du fret en 1912. P.»Hermite. *

September, 191?f. La CoopeMtion en Angleterre. Claud W.
AIullins. Les Associations cooperatives en ^AlUmagne. II^
Cruger. Le mouvement ouvrier jaunc. Ou. Heiss. Enquete
Hur le mouvement de quelqucs prix en Espagne pendant un
siecle. Andr6 Barthe.

October, 1913. Les nouveaux pr ogres de V Emigration Bntq^mique^.
Ken:^ Gonnard. Les Reformes agraires et revolution des classes
rurales en Russie. P. Chasles. Cinqnante annees dc la ' vie
d*une banque vien^ioise (1863-1913). Cii. Morawitz. An
account of one of the earliest English foreign banks — the Aii“Io»-
Aus'trian Bank. #

Archil) filr Sozialwissenhhaft und Sozialpolitih (Tiibingen).

September, J913. Die Burequhratisierung und die gelbe Arbeiter-
hewegung. Alfred Weber. Der SyndiJcalismus in England*
(60 pp.) C. K. Ogden. A substantial account of current
English opinion. Die allgcmeinq TeuertUg im Lichle de^
Naticmalokonomie. Ludwig von Misbs.

Schmollers Jahrbuch (Munich).

Part 4^ 1913. Die Emissionssiaiisiik in Deutschland und einigten
auvldndischen Staaten. M. Marx. A useful collection of
material relating to new issues of capital. Die Eaten der
‘ Niederldndischen Bank. Ein Beitrag zur tFrage der Au^gabe
kleiner Eaten. C. Eisfeld. Zur Frage der Lebenshaltung dfs
Mitielstandes. A. GiiNTHEft. Die Konsumvereinswesen in
Deutschland. W. Tit,s. c . ^ •

RECENT PERIODICALS AND NEW BOOKS

649

19l3]

Jahrbucher fiir Nationalokonomie und Statistik (^Jena).

May, 1913. Di^^Ijeiatifkqsfdhigkeit und andere Geaichtspunkie bit
BcmesBung^ von 0%idleistungen. (73 pp.; Herbebt Conrad.
Wirtach^ft^erhdltnisse und Wiriachaftabeziehungen Indiens
inabtsondere zu^ England tCnd Deutschfand. Dr. Kreuzkam.

A slight treatment of the obvious statistics.

JTune, 1^3. ^Der Ruckgang dcr Oehurtcn ah aoziales Problem.
H. FuRyn. Stand und LHstungen der •franzosiachen'* Stddte-
eigitiatik, Mm ^er. Bic Brotpreise in Berlin im Jahre 1912.
H. Guradze. • *

July/ 1913. ^Die Marxache Grundrenteniheorie. Bin Beitrag zur
* ^^Dogr^engeachichte der Qrundr^nic . G. Albrecht. Di^,Arbeiis-
zeit in der Grosseiaev Industrie. B. Wiskott. #

August/ IWS. Die Entvncklung (Tea deiitschrussiachen Geireide-
verkehrf un^er* den D and cl avert rdgen von 1894 und 1904.

F. Beckmann. Wirtschaft und Mode. A. ^ Elster. Dis^
Entwicklung des Preisniveaus und de^a Getreidehedarfs in

^DeufacMand und England in den letzien Dezcnnicn. A
valuable collectioruof tjables.

September, 1913. Der Suhjektive Wert ah Grvndlage der J^ina-
theorie Bohm-Bawerks. X)tto Conhad. Die Mease in Nischny-
* Nowgorod. Vladimir Sekger. EngliarJfe Wiriachafisgeachichte.’'

G. Br'^DNttz. a critique ^of recent English contributions to
Englis^, economic history.

October, 1913. Privatwirfschaftalehre, VolkaunrtaehaHalehre , Wert-
wirtachaffalehre. (56 pp.) Karl Diehl. A discussion of the
fields into whicl? it is usual in Germany to diyide ecc^omios.
Noa^mber, 1913. Vermiasfe Folgen der dcutschen Sozialveraielier-
j^ung. A. .Fischer. Das Wcaen der Wirtschaft und der
Ausgangapunkt der Nationaldkonomie . (50 pp.) Bobert

Liefmann. a further contribution to tbe discuaiions of Scope
and Method, which are now ocoupvit'g so large a place in
Gi'rman econonjic periodicals.

'Annaleri fiXr.Soziale Politik und G^setzgehung (Berlip).

PJtRTS r and 2, VoL. TTI., 1913. Fortgang und Tragweite der inter;

* national en Arheiterschutzvertrdgc . Stephan Batwsr. Zur

Methode' und Technik der HajiiftfiaJtungasiatiatik. (75^ pp.)
Walter Sc^iff. An important study in statistical method,
August Behel ah Sozialpolitiker. Heinrich Braun.

Giomale degli Economisti (Eome).

September 1913! Num^ri Indici delle Gondizioni cconomichc
> d’ltalia. S. Mortaea. While admitting that the impresRions
of the economist about the progress of a country may be as
valuable as an average of ’inatfs numbers, the eminent
statistician has framed several such compound fneasures,
litilising some seventeen indices of progress (population, foreign
- trade, output of coal, &c.), and variously combining ibese
elements witn weights inverse to variability. ® measures
agree satisfactorily. SuUom. dottrina matematica daMa dipend^
•enza reciproccb dei fatti economici, Dom. G. Bekardi. A

6S0

XHS BGOlIOMtO JOURNAL

[dec.

•

philosophic disquisition. Per un Sistema d'impoBte sul red^to
consumato, N. Tkevisonno. A criticisj^n of Professor Einaudi’s
recent advocacy of equality in taxation. (iTurifi: Bona, 1912.)

October. 11 mwvo regime deUe horse. G. del .Veoohio.

ferring to the nejv regulation^ of the Italian nwfnex-markeC
I/bnporta^ unica sui Consumi non ncoessarif U. Riqci. On the
postulate of equality in taxation and the consequence, drawn
from it by Fisher, Einaudi, Projbo, and others. S^dla Mortality
degli invalidt. F. Insolera. A statistical study.

La Hiforma Sociale (Tuiin).^l

Augu^t-Aeptember, 1913. Jja^questiove del Cdvibrio.f O. riiEL
VECOteio. A searching enguiry into the relation between the
state of the exchanges and the amount of the* circul^ion during
recent years in Italy. I prezzi (lellc mercf in Ita fa nel 1911
Achxlle ^iEcco. ^Prices in Italy for 1911 are compared with
prices for other years and in other countries ; showing a general
ri^e since last century. « *

OcTOBER'-NovEMBPm. 11 Canale di IPanawa. A.* Geisser. A
histdry-of the construction and estimate of its Consequences.
Vi nna nuova proposta per rend^re pin Htahilc il valorc deJlo
moneta. A. GRAzfANi. A criticism of Prof. Irving Fisher’s
project. La produzione solfifera Siciliana. Felice Vinci*
La valorizzazione del Caffe nel DraBile. E.. de pAr^^j.

De Economist (The Hague).

^ ^ f*

September, 1913.* De Curagaosche Banh. — III. G. J. Fa'bius.

Continued in October and November. ,,

November, 1913. De oudste Nederlandsche hevolkingssi'iHstielx

*W. S. Unger.

1913 ]

RECENT FEBlOCICAIiS AND JIBW BOOKS

651

NEW *BOOKS.

• *

English.

A* UnicSiist Agri cult urn I •Policy. ^Lotidon; John Murraik 1913.
Pp, 31. net. ,

[** By a gtoAof tfnioiiiists.”]

Estey (J. a\,.). Revolutionary Syndicalisiii. • Lotidon . P. S.^
King. 1913. Pp. xxxii-h212. • Is. 6d, net.

[With ^ introduction by Mr. L. L. Price. An attempt “ to explain the*theory
and practice of the syndicalfist inpvement in ooutemporary Bocialism.” •To be
reviewed,] ^ ^ ^ *

Gjffen (Sir Robert). Statistics. Loudon : Macrnillau. 1913.
Pp. xiii + 485. 128. net. ^ .

*[This posthumous work, written about* the years 1 898-1 9(X) and left in a Some-
what unfmisheif state, has been edited by Mr. Higgs and Mr. Vule. To be roviowed.

Gill (Conrad). The l^aval Mutinies nf 1797. Manchester:
University Press. I^^IS. Pp. xix-HM12. 10a. Odl^ net. #

^ [Of interest to economists on account of the close rosemblance of those rautinios
‘ to the modern strike^. Reviewed above.]

Goring (Chas,). Th^ English Convict: a statistical stiiciy.
London : H.M. Stationery Oftice. 1913. Pp. 440. Ua.

[This elaborate study by the Deputy Medical OfUcei at the Parkhurst Prison has
bjipn published officially. •With the assistance of ot: r authorities, statistics have
been collected during the last 10 years giving accurate biometrical measurements of
a lafge mumber oi prisoners convicted of similar offences. The results are chiefly
negative. Contrary to •what has been maintained* %y some writers, the Author
con^s to thg conclusion that, “ as individuals, criminals possess no characteristics,
physical or mental, which are not shared by all people.”] ^

Greenwood , (Arthur). The Health •and Physique of School
Cfeildren. I^ndou: P, S. King. 1913.^ Pp. xv + 96. Is. net.

[A publication of the^Ratan Tata Foundation.]

• Hawtkey ,(R. (Jr.). Good and Bad Tradj : an inquiry into the
causes trade fluctuations. Jiondon : Constable. 1913. Pp. viii +
,229. 6s. net. •

■^[This^is a theoretical discourse in which great stress is laid on the ^actuations
in The supply of money credit. Reviewed above.]

Holland (^^JRNard). The Fall* of* Protection, 184(^1850.
TibSdon: Arnold.’' 1913. Pp. xi-)-*372. 12s. i)d. net.

[To b8 reviewed.]

JdSEPH (Leopoiid). The Evolution of German Banking.
lAondon : C. and E. Layton. 1913^ Pp. 124. Ss. Qd. net.

, ^our lectures delivered at the Dondon School of Economics by the Manager of
the xjonobu Office oFthe Swiss Bankverein. To be reviewed.!

i '

%52

THSL BOONOMIO JOUKCTAIi

Kbnksdy (WiluaJi).
on Policy and Opinion.
7<. 6d. net.

[SBO.

English Taxation a.d. 164(K1799 ; an Essay
London; G. Belli. (1018/ Pp. ix+199.

f\ *

[B&sed on historical research carried out during the author’s tex^^irc of tHb Slri.V .
Besearch Studentship at the London School of Boononii(|«. ^ he rovi^^ed]

Knoop (Douglas). Outlines of Eailway Economics, London: •
Macmillan. 1913. Pp. xvi-f 274. 5«. net. *

[To be reviewed.]

Lehfeldt (R^ a.). The South African National, Debt.« Cape
Town : <S. A. Association for the Advancement of Soiree. 1^13. '
Pp. ,11, V . , ^ o f

[An interesting pamphlet, reprint*ed from the South Africm Joupial of Science,
which contains some novel suggestions as to the5treati}f.ent ^f Sinking Funds by
developing countries, which are oontinnaPy borrowing mojte (te new capiifiil
^expenditure thamtheyoap pay off in respect of former loans.]

Lpoiid (G. I. H.). The Cutlery Trades. London: Longmans.
1913.^ Pp. xvi + 498. 128. 6d. net. , *

p An* historical tcssay in tlv* economio^of* small-scale production.” To be
reviewed.] ^ "

* ' '

Mack AY (ThomAs).v ,The Dangers of Demrocracy : Studies in t{ie
Economic Questions of the Day. London. 1913.

[A selection, edited with an Introduction by, Sir Arthur Olay, of the articles
contributed to the Quarterly Review by the late Mr. Thomas Mackay between the
years 1894 ^nd 1909. To be reviewed.^" t ^

O’Farrell (Horace Handley). The Franco-German War In-
demnity and its Economic "Results. London! Harrison and^Sonff.
19^8. Pp. j+80.

[Published, with an introduction by Viscount Esher, by the Garton Foundation.
A criticism of one of Mr. Norman Angell’s contentions in The Great Illusion. To be
reviewed.] ^ ^ «

Redfern (Percy). The Story of the C.W.S, : tlfo Jubilee HisWy
of tne Co-operative Wholesale Society, 1863*491^. Manchester:

• The Co-operative Wholesale Socie^. 1913. Pp. viii -1-489'. ,

net. " ^ r *

[«?‘The following pages ... go beyond a formal record of events in C.V^S.
history. They attempt a history of the principles also, ^ewed iiY relation to the
larger world that environed their development.” To he renewed.]

Sarkar (Prop. Jad%nath). Economics of British India. Third
edition, enlarged and partly rewritten. Oalcuttg. M. C, Saiiar and
Sons. 1918. Pp, xii-f 824. 68. net. * * • «

[An earlier edition of this small text book was reviewed in the Eoovomio Joubxil
in September, 1911.]

« fc

Spklding (W. F.). Foreign Banking Appointments. « Londei^: ^
The A^uthor. (22,^ Lightcliffe Road, Palmer’s Green.) 1933. Pp*
28. l8. net:

[This ia described as an epitome of the conditions governing entry into the,

f rinoipii foreign and colonial hanks, with sonn^ account of the prospects offeied.
t deals also with such questions as the cost of living, and should prove exoeedin^y
useful for its purpose.] * - • *

MOBNT PBIUO0IOALS AND.JJBW BOOKS

658

tThe Ltod : Sie Beport of the Lsnd Enquiry Committee. Vol. I.
Bufal. E^ndoii f Heddir and Stoughton. 1918. Pp. lxxxiii+49D.
la. net. \ * •

V [Th® B^porlof Sir. Llqvd George’s unofficial Comniittee, with an iuferoduotion
by Mr. Dj&e Aoland, ajad an Historical Outline by •Dr. Gilbert Slater. To

reviewed.]

The of Social Progress for 1918-14. London : Thomas

Nelson. 1918. Pp. 595. 2s. nqt.

a Bununaryof r^oeut Id^islation, official reports^ and voluntary effort,
with regard to the weUare of 4he people.” The second issue of tnis very cheap
annual^ * % * •

DB P.).' Money Power for India. Wokffig:, The
Oriental Institute. 1918. Pp, 25. * f

[BeprintedV^ona the AsieMc Quarterly Bemew. Mr, Webb advocates a Gold
^nt and a OoM Ourrenby for India, partly for their own sake, partly in order to
Seep down the ^e of prices, due to a thperfluity of gold elsewhere. He is in favo^
of a State Bank for India as distinguished from a CentiallBanl? mainly ia p;rivate
hands.] ^

^HBBPLBY (James Davenport). The Trade of the World.
London: Chapman and HaH. 19J3. Pp. 436. 9a. net , *

[By an American writer, with nuiaerous illtf^tAtions. To be reviewed.]
Williams (Aneurin). Co-Partnership* and Profit-sharing.
London": Williams and Norgate. , 1913. Pp.*256. la. net.

[In the hnwmity Library. To be reviewed.]

Williamson (J. A.). Maritime Enterprise, 1485-1558. Oxford :

The Clarendon Press^

[To be reviewed.]

Pp. 416. 14a. net.

American.

Dbibler (F. S.). The Amalgamated Wood Workers* Inter-
national Union of America. Madison, Wisconsin. 1912. Pp. 211#
40 cents, •

* A historical stuffy of Trade Unionism in its relation to the developmeht of an
industry.” A doctorial thesis, being No. 611 of Bulletin of the Univ^sity of
Wiseonsin.]

^ *Hanby (Lewis H.J. Business Organization and ConqjDination. \
New Ydik: The Macmillan Company. 1913. Pp. xiv + 483.
6d. net.^ " •

P* An analysis of tlffi evolution and nature of business organization in the United
, States and a tentative solution of the Corporation and Trust Psoblems.*’ To be
'.reviewed.] m

i •

Lapbeb (Almon^ Wheeler). Indian Slavery in Colonial times
within the present limits • of the United States. New York :
^lumbia University. 1918. Pp. 352. 12d. net. *

[Columbia Vmversity Studies, LIV-8.]

Mitchell (J^bsley Clair). Business Cycles. Berkeley^; Uni-
versity of Calimmia Press. 1913. Pp. xviii-h01<^. $5. #

[A very large quarto, being volume iii of the Memoirs of the University of
Calif omia. ** This book offers an analytic desoriptiop of the complicated prodSsses
by which seasons of.bucluie^ prosperity, crisis, depression, and revival *00010 about in
the* xnodem worid. The znateij^s use# consist chiefly of market Jjficrts aqd

• Statisti^ oonoerniug the busmess cycles which have run their course since 1890 in^
the United States, •Englahd, Germany, and France/* To be reviewed.]

654

THE, ECONOMIC JOUMIAIi [DEC.

. MuENSTEaBERG (Huoo). Psychology ai^ Indys^l i^fficierfby.
Boston: Houghton Mifflin. 1913] Pp. vu + S21.

[To be reviewed.] ' '

French.

Aftalion (Albert). Les Crises p^rjiodiques de. Surprdductipn.
Vol. I. Les variations p^riodiqueg des prjx et des» revenue.: les
theories' dominantea. ’ Vol. H. Les rnouvenaents f driodiques de la
production: Essai d’une tlidorie'. Paris: Marcel Rivife^. 1918.
Pp. xii + 317 + 418. Pr. 16. ' . ^

[To be ^ev^ewed.] *

CoRN^LissEN (Christian).* 'fheorie de^ k Valeur, avec une Refu-
tation des Theories de llodbei'tus, KetA Rferx, Stanley Jevons, et
Bohm-Bawerk. Paris: Giard & Briere. Pp. mQ, Fr. 10.

[“ Second Edison, thoroughly revised.” 5^0 be reviewed.] r *

Core (Valentino). Le Marche des C4r4ales d ’^Anvers. I^me.
1913.1 Pp. Vi + 64. . ^

[A public^ion of the Institut International d^'AgricultureSl

Ilitch (ALEXifNDiiii:). Ke tjhemin de fer de Bagdad au point de
vue Politique, EQononfiqde et Financier, ou PExpanaion de ifAlle-
magne en Orient. Brussels : Miseh & Thron, 1913,. Pp.. 239. •

[To be reviewed.] ^

Tougan-Baranowsky (M.). Les Crises industrielles en Angler
terre. Paris: Giard & Briere. ^1913. Pp. vii+476. Fr, l2.

[Translated ^rom*fehe second Russian edition by J. kchapiro, and revised and
augmented by tnb author. To be reviewed.]

German.

* ^

Adler (Karl). Bankpolitischc Aulsatze. Munich: Duucker
'k Humblot. 1913. Pp. 38. M. 1.

[A reprint of two essays.]

EjTGELBRECHT (Erwin)^ Die Agrarverfassung ^les* Ernilande’h und
ihre historische Entwicklung. Munich : Duncker & Humfelot.
1913. P^p. viii + 256. M. 6.50.

[Schmolior’s Forschungen, N<j. 169.]

Gerlach (K. a.). Theorie und Praxis des SyMdikalisrnuj^.

Munich: Duncker & Humblot. 1913. Pp. 22. ^ M. 0.60.

c c

Kulemann (W.).^ •'Die Berufsvereine. Erste Abteilung:*
Geschichtliche Entwicklung der Berufsorganisai^ji^nen der Arbeit-
nehmer und Arbeitgeber aller Liinderi Vols.''4, 6, 6. Berlin*
Leonhard ^'Simion. 1913. Pp. xxiv + 560 + vii + 551 -f vii + 336.
M. 30. *

[Second revised edition of ^lewertischaftshewegunhgy which was reviewed in the
Economic Journal, x, p. 218. The first thre^ volumes of the present ediifc^i
were reviewed, vol. xix, p. 271. To be reviewed. The fourth volume deals with
Great Britain and France and the countries Of Northern Europe ; the fifth volume
wieb Southern Europe ; and the sixth volume with other countries.]

Ku>pi]#ANN (Karl). Die Reichsapbejt«ldsenversicherung. *

Tubingei: J. C. B. Mohr. 1913.* Pp. Viii + l.TO. M. 3. '

[To be reviewed.]

19fS] BEOBNT PERIODICAIiS AND NEW BOOKS 665

Lexis^^ Allgerneine- Vdkswirtschaftslehre. Second

revised Berlin V T^ubiier. 10i3. Pp. 256. M. 7, *

[The firstl^iioi^wafi ilyiewed in the HooKOMic^otraNAL for March, 1912, p. 75.]

• Mann (1^* Bft Vbrgeschiohte des Finanzsystems von

Jakn tiaw^ Munich ; Duncker &»Humblot. J913. Pp. 65.

[Repru^ted ^om SohmoHer’s Jahrhmh.'l *

MAtAii^j (^gANz). Die.; Arbeitsmittel Maschine^ Apparat, Werk-
zeug. Munich: Duncker A' Hurnblot. 1913. ’ Pp. 214. M. 6.50.

[“ Eine^bhandlung .itb^r ibren* Einfluss auf den Industrieketrieb unter
eingehepder BeriicksichUgulig dee Apparatwaeeus.’']

(®Iax). Das " bsterreichiscbe StaatsschuWnwesen
voiP^^einen Anfangen^ bid isur Zeltetzeit. ..Munich: Dimckbr &
Humblot, IMJ?. Pp. ixvr 182. M. ^. •

.[To he revidMd" . •

Sella (i^l'\NUEL)/ ‘ Der Wandel des Besitzo^- ^’’ersuch eine]k
Theorie des' Heicbtums als Organismus. ' Leipzig,: Duncker iv
Hutiailot., 1912. Pp. 98. M. 2.50.

[Authorised tranidation fr«h the Italian by Dr. Bluwstein.] ,

Wehberg (Heinrich), .^Boi4e«jreform im ^'Lichffe ^des

‘ humetnistischeU Boziahsmus.^ Munich: DunClcer* A Huniblot.
1918.* Pp. xii+170. M. 5. .

•[On *h% oc^Usion of the twenty-fifth anniversary of tlae foundation of the'Bwnd
Diutschei^Jiomg^of owner. To be reviewed.]

WiETH-IvNubsEN (K. A,). BauernfAge und Agrarreform in Buss-
land. Munich: Dun^ier & Humbl#t, 1913. Pp. vi + 2^. M. 8.
[To be reviewed.] « ^ ^

^ WiLDEN (Josjsf). Neue Wege der Gewerbeforderung. Munich :
Duncler & Jlumblot. 1913. Pp.‘69. M. 2.

Italian.

'* ScHEBMA (G.). .Studio nel carattore oconornico della coopera-
.Palermo-: Fiorenza. 1913. ^

, Steprni {A. *de]. Velocity e giacen^e delle monete. Venice:
*1913.

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